Inventory information for Part 311 of Marigold Corp. discloses the following information for the month of June. June 1 Balance 302 units @ $11 June 10 Sold 198 units @ $27 11 Purchased 803 units @ $13 15 Sold 498 units @ $28 20 Purchased 498 units @ $14 27 Sold 296 units @ $30 Assuming that the periodic inventory method is used, compute the cost of goods sold and ending inventory under (1) LIFO and (2) FIFO. (1) LIFO (2) FIFO Cost of Goods Sold $enter a dollar amount $enter a dollar amount Ending Inventory $enter a dollar amount $enter a dollar amount
Inventory information for Part 311 of Marigold Corp. discloses the following information for the month of June.
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June 1
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Balance
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302 units @ $11 |
June 10
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Sold
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198 units @ $27 | |||||
|---|---|---|---|---|---|---|---|---|---|---|
|
11
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Purchased
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803 units @ $13 |
15
|
Sold
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498 units @ $28 | |||||
|
20
|
Purchased
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498 units @ $14 |
27
|
Sold
|
296 units @ $30 |
Assuming that the periodic inventory method is used, compute the cost of goods sold and ending inventory under (1) LIFO and (2) FIFO.
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(1)
LIFO |
(2)
FIFO |
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|---|---|---|---|---|
|
Cost of Goods Sold
|
$enter a dollar amount
|
$enter a dollar amount
|
||
|
Ending Inventory
|
$enter a dollar amount
|
$enter a dollar amount
|
Assuming that the perpetual inventory method is used and costs are computed at the time of each withdrawal, what is the value of the ending inventory at LIFO?
|
The ending inventory at LIFO
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Assuming that the perpetual inventory method is used and costs are computed at the time of each withdrawal, what is the gross profit if the inventory is valued at FIFO?
| Gross Profit (FIFO |
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Assuming that the periodic inventory method is used, compute the cost of goods sold and ending inventory under (1) LIFO and (2) FIFO.
Inventory or Stock is the goods and material a business holds for a resale.
- Periodic inventory system.
- Perpetual inventory system.
Periodic method:- Under periodic inventory system inventory account is not updated for each purchase and each sale. All purchases are debited to purchases account. At the end of the period, the total in purchases account is added to the beginning balance of the inventory to compute cost of goods available for sale. The ending inventory is then subtracted from the cost of goods available for sale to compute cost of goods sold. The ending inventory is computed at the end of the period by a physical count.
Cost of goods sold= Beginning inventory+ Net purchases - ending inventory
Perpetual method :- Under the perpetual system the inventory account is constantly (or perpetually) changing. When there is purchase of inventory, buyer record it as debit to inventory account( rather than using purchase account as used under periodic method). And when there is sales, inventory account is decreased(credited) and it is charged to cost of goods sold account. So here no need to calculate cost of goods sold at the end of accounting period, as with each sales, cost of goods sold account is updated. Perpetual inventory system is by far better method for tracking inventory, since it can provides reasonably accurate results on an ongoing basis, if properly managed.
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