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Jonny Cake Co's beginning inventory and purchases during the year ended December 31, 2016 were as follows: Unit Units Cost Total Cost January 1 Inventory 1
Jonny Cake Co's beginning inventory and purchases during the year ended December 31, 2016 were as follows: Unit Units Cost Total Cost January 1 Inventory 1.000 $50.00 $50.000 March 10 Purchase 3.000 $52.00 $156,000 June 25 Sold 1600 units August 30 Purchase 2.600 $55.00 $143,000 October 5 Sold 4.000 units November 26 Purchase 1.000 $5768 $57.680 December 31 Sold 800 units Total 7,600 $406,680 Instructions: 1. Determine the cost of inventory on December 31, 2016, using the perpetual system for the following costing methods: a First-in, first-out b. Last-in, first-out c. Weighted average cost 2. Determine the cost of inventory and Cost of Merchandise Sold on December 31, 2016, using the periodic system for the following costing methods a Furst in, first-out b. Last-in, first-out Weighted average cost c
Expert Solution
Perpetual Inventory System
a. FIFO, Ending Inventory = $68680
| FIFO | Cost of Goods Available for sale | Cost of Goods Sold | Inventory on hand | |||||||
| Date | Activity | Units | Unit Price | Amount | Units | Unit Price | Amount | Units | Unit Price | Amount |
| Jan-01 | Beginning Inventory | 1000 | $ 50.00 | $ 50,000 | 1000 | $ 50.00 | $ 50,000 | |||
| Mar-10 | Purchase | 3000 | $ 52.00 | $ 156,000 | 1000 | $ 50.00 | $ 50,000 | |||
| 3000 | $ 52.00 | $ 156,000 | ||||||||
| Jun-25 | Sales | 1000 | $ 50.00 | $ 50,000 | ||||||
| 600 | $ 52.00 | $ 31,200 | 2400 | $ 52.00 | $ 124,800 | |||||
| Aug-30 | Purchase | 2600 | $ 55.00 | $ 143,000 | 2400 | $ 52.00 | $ 124,800 | |||
| 2600 | $ 55.00 | $ 143,000 | ||||||||
| Oct-05 | Sales | 2400 | $ 52.00 | $ 124,800 | ||||||
| 1600 | $ 55.00 | $ 88,000 | 1000 | $ 55.00 | $ 55,000 | |||||
| Nov-26 | Purchase | 1000 | $ 57.68 | $ 57,680 | 1000 | $ 55.00 | $ 55,000 | |||
| 1000 | $ 57.68 | $ 57,680 | ||||||||
| Dec-31 | Sales | 800 | $ 55.00 | $ 44,000 | 200 | $ 55.00 | $ 11,000 | |||
| 1000 | $ 57.68 | $ 57,680 | ||||||||
| Total | 7600 | $ 406,680 | 6400 | $ 338,000 | 1200 | $ 68,680 |
b. LIFO, Ending Inventory = $61536
| LIFO | Cost of Goods Available for sale | Cost of Goods Sold | Inventory on hand | |||||||
| Date | Activity | Units | Unit Price | Amount | Units | Unit Price | Amount | Units | Unit Price | Amount |
| Jan-01 | Beginning Inventory | 1000 | $ 50.00 | $ 50,000 | 1000 | $ 50.00 | $ 50,000 | |||
| Mar-10 | Purchase | 3000 | $ 52.00 | $ 156,000 | 1000 | $ 50.00 | $ 50,000 | |||
| 3000 | $ 52.00 | $ 156,000 | ||||||||
| Jun-25 | Sales | 1600 | $ 52.00 | $ 83,200 | 1000 | $ 50.00 | $ 50,000 | |||
| 1400 | $ 52.00 | $ 72,800 | ||||||||
| Aug-30 | Purchase | 2600 | $ 55.00 | $ 143,000 | 1000 | $ 50.00 | $ 50,000 | |||
| 1400 | $ 52.00 | $ 72,800 | ||||||||
| 2600 | $ 55.00 | $ 143,000 | ||||||||
| Oct-05 | Sales | 2600 | $ 55.00 | $ 143,000 | 1000 | $ 50.00 | $ 50,000 | |||
| 1400 | $ 52.00 | $ 72,800 | ||||||||
| Nov-26 | Purchase | 1000 | $ 57.68 | $ 57,680 | 1000 | $ 50.00 | $ 50,000 | |||
| 1000 | $ 57.68 | $ 57,680 | ||||||||
| Dec-31 | Sales | 800 | $ 57.68 | $ 46,144 | 1000 | $ 50.00 | $ 50,000 | |||
| 200 | $ 57.68 | $ 11,536 | ||||||||
| Total | 7600 | $ 406,680 | 6400 | $ 345,144 | 1200 | $ 61,536 |
c. Weighted Average, Ending Inventory = $66600
| W. Avg | Cost of Goods Available for sale | Cost of Goods Sold | Inventory on hand | |||||||
| Date | Activity | Units | Unit Price | Amount | Units | Unit Price | Amount | Units | Unit Price | Amount |
| Jan-01 | Beginning Inventory | 1000 | $ 50.00 | $ 50,000 | 1000 | $ 50.00 | $ 50,000 | |||
| Mar-10 | Purchase | 3000 | $ 52.00 | $ 156,000 | 4000 | $ 51.50 | $ 206,000 | |||
| Jun-25 | Sales | 1600 | $ 51.50 | $ 82,400 | 2400 | $ 51.50 | $ 123,600 | |||
| Aug-30 | Purchase | 2600 | $ 55.00 | $ 143,000 | 5000 | $ 53.32 | $ 266,600 | |||
| Oct-05 | Sales | 4000 | $ 53.32 | $ 213,280 | 1000 | $ 53.32 | $ 53,320 | |||
| Nov-26 | Purchase | 1000 | $ 57.68 | $ 57,680 | 2000 | $ 55.50 | $ 111,000 | |||
| Dec-31 | Sales | 800 | $ 55.50 | $ 44,400 | 1200 | $ 55.50 | $ 66,600 | |||
| Total | 7600 | $ 406,680 | 6400 | $ 340,080 | 1200 | $ 66,600 |
Periodic Inventory System
i) FIFO
Ending Inventory = 1000 x 57.68 + 200 x 55 = $68680
Cost of Goods Sold = $406680 - 68680 = $338000
ii) LIFO
Ending Inventory = 1000 x 50 + 200 x 52 = $60400
Cost of Goods Sold = $406680 - 60400 = $346280
iii) Weighted Average
Average Cost per unit = $406680 / 7600 = $53.51 per unit
Ending Inventory = 1200 x $53.51 = $64212
Cost of Goods Sold = $406680 - 64212 = $342468
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