Asked by Siyali Singhaniya on Jun 28, 2024
Verified
Shellhammer Company's inventory records show the following data for the month of September: Units‾ Unit Cost ‾ Inventory, September 1 100$3.34 Purchases: September 8 4503.50 September 18 3503.70\begin{array} { l c c } & \underline { \text { Units} } & \underline { \text { Unit Cost } } \\\text { Inventory, September 1 } &100& \$ 3.34 \\\text { Purchases: September 8 } & 450 & 3.50 \\\quad\quad\quad\quad\quad\text { September 18 }& 350 & 3.70\end{array} Inventory, September 1 Purchases: September 8 September 18 Units100450350 Unit Cost $3.343.503.70 A physical inventory on September 30 shows 200 units on hand. Calculate the value of ending inventory and cost of goods sold if the company uses FIFO inventory costing and a periodic inventory system.
FIFO
"First In, First Out," an inventory valuation method where items produced or acquired first are sold, used, or disposed of first.
Periodic Inventory System
An inventory accounting system where updates to inventory levels are made at specific intervals, and cost of goods sold is calculated at the end of an accounting period.
Ending Inventory
The worth of products ready to be sold at the closure of a financial period, determined by adding the initial inventory to purchases and subtracting the cost of goods sold.
- Determine the value of ending inventory and cost of goods sold using different inventory costing methods.
Verified Answer
Cost of goods sold:
Units available for sale (100+450+350)=900( 100 + 450 + 350 ) = 900(100+450+350)=900
Units sold 900−200=700900 - 200 = 700900−200=700
100×$3.34=$334450×$3.50=1.575150×$3.70=555‾ Cost of goods sold $2.464‾\begin{array}{rrr}100 \times \$ 3.34= & \$ 334 \\450 \times \$ 3.50= & 1.575 \\150 \times \$ 3.70= & \underline{555} \\\text { Cost of goods sold }& \underline{\$ 2.464}\end{array}100×$3.34=450×$3.50=150×$3.70= Cost of goods sold $3341.575555$2.464
Learning Objectives
- Determine the value of ending inventory and cost of goods sold using different inventory costing methods.
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