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Use the following information about Acme Co's inventory and purchases during October, to answer a & b
Use the following information about Acme Co's inventory and purchases during October, to answer a & b.
October Units Unit Costs
1 Beginning Balance 35 3
6 Purchase 70 4
11 Purchase 45 5
16 Purchase 50 6
In addition, be advised that Acme uses the periodic inventory system and sold 149 units during October
a. Calculate Ending Inventory and the Cost of Goods Sold using the FIFO method. [1 mark]
b. Calculate Goods Available for Sale and Cost of Goods Sold using the Average Cost {AC) method. [1 mark]
Expert Solution
Answer:
a.
| Periodic Inventory - FIFO | |||||||||
| Available for Sale | Cost of Goods Sold | Inventory on Hand | |||||||
| Date | Quantity | Unit Cost | Total Cost | Quantity | Unit Cost | Total Cost | Quantity | Unit Cost | Total Cost |
| Oct. 1 | 35 | 3 | 105 | 35 | 3 | 105 | |||
| 6 | 70 | 4 | 280 | 70 | 4 | 280 | |||
| 11 | 45 | 5 | 225 | 44 | 5 | 220 | 1 | 5 | 5 |
| 16 | 50 | 6 | 300 | 50 | 6 | 300 | |||
| Total | 200 | 910 | 149 | 605 | 51 | 305 | |||
Answer Ending Inventory is: $305
Answer Cost of Goods Sold is: $605
b. Average cost per unit = $910/200 = $4.55
Cost of goods sold = 149 x $4.55 = $677.95
Answer Goods Available for Sale is: $910
Answer Cost of Goods Sold is: $605
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