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Chapter 6: 16E_1 (page 362)

Question:Golf Unlimited carries an inventory of putters and other golf clubs. The sales price of each putter is \(119. Company records indicate the following for a particular line ofGolf Unlimited鈥檚 putters:

Date Item Quantity Unit Cost

Nov. 1 Balance 24 \) 53

6 Sale 20

8 Purchase 30 70

17 Sale 30

30 Sale 2

Requirements

1. Prepare a perpetual inventory record for the putters assuming Golf Unlimited usesthe FIFO inventory costing method. Then identify the cost of ending inventoryand cost of goods sold for the month.

Short Answer

Expert verified

Ending Inventory:$140

COGS:$3,232

Step by step solution

01

Step-by-Step-SolutionStep1: Perpetual Inventory Record using FIFO

DatePurchase/openingSalesBalance

Units

Cost per unit

Amount

Units

Cost per unit

Amount

Units

Cost per unit

Amount

Nov 1

24

$53

$1,272

24

$53

$1,272

6

20

$53

$1,060

4

$53

$212

8

30

$70

$2,100

4

30

$53

$70

$2,312

17

4

26

$53

$70

$2,032

4

$70

$280

30

2

$70

$140

2

$70

$140

Total

54

$3,372

52

$3,232

2

$70

$140

02

Ending inventory and COGS

Ending inventory in the perpetual system under the FIFO method is the value of ending inventory at the current cost and the COGS would be based on historic prices. This is so because of the implication of the first in first out method in the allocation of cost to the issued inventory.

In the given case, the ending inventory on 30th Nov amounts to $140 and the COGS for the period amounts to $3,232.

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Most popular questions from this chapter

Steel Mill began August with 50 units of iron inventory that cost \(35 each. During August, the company completed the following inventory transactions:

Units Unit Cost Unit Sales Price

Aug. 3 Sale 45 \) 85

8 Purchase 90 $ 54

21 Sale 85 88

30 Purchase 15 58

Requirements

1. Prepare a perpetual inventory record for the merchandise inventory using the FIFO inventory costing method.

Determining inventory accounting principles

Ward Hardware used the FIFO inventory costing method in 2018. Ward plans to continue using the FIFO method in future years. Which accounting principle is most relevant to Ward鈥檚 decision?

Futuristic Electronic Center began October with 65 units of merchandise inventory that cost \(82 each. During October, the store made the following purchases:

Oct. 3 25 units @ \) 90 each

12 30 units @ \( 90 each

18 35 units @ \) 96 each

Futuristic uses the periodic inventory system, and the physical count at October 31 indicates that 80 units of merchandise inventory are on hand.

Requirements

1. Determine the ending merchandise inventory and cost of goods sold amounts for the October financial statements using the FIFO, LIFO, and weighted-average inventory costing methods.

Steel It began January with 55 units of iron inventory that cost \(35 each. During January, the company completed the following inventory transactions:

Units Unit Cost Unit Sales Price

Jan. 3 Sale 45 \) 83

8 Purchase 75 $ 52

21 Sale 70 85

30 Purchase 10 55

Requirements

6. If the business wanted to maximize gross profit, which method would it select?

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Jan. 5 Purchase 156 crates @ \) 64 each

13 Sale 180 crates @ \( 100 each

18 Purchase 114 crates @ \) 75 each

26 Sale 150 crates @ $ 116 each

Requirements

3. Prepare a perpetual inventory record, using the weighted-average inventory costing method, and determine the company鈥檚 cost of goods sold, ending merchandise inventory, and gross profit. (Round weighted-average cost per unit to the nearest cent and all other amounts to the nearest dollar.)
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