Question
Use the data provided in P2 but assume that the company uses the periodic inventory system....
Use the data provided in P2 but assume that the company uses the periodic inventory system. P2 the inventory of Wood4Fun and data on purchases and sales for a two-month period follow.The company does its books at the end of each month It uses the periodic inventory system.Data is as follows, The proble is for P3. page 294. Needles & Powers ( Perpetual Inventory system and Inventory costing Methods. )Use the data as follows but assume that the company uses the perpetual inventory system. I think this is what is messing me up? Do we run a balance of enventory after each transaction?
Apr 1 Beginning inventory 50 units @ $204
Apri 10 Purchase 100 units @ $220
April 17 sale 90 units
April 30 Ending inventory 60 units
May 2 Purchase 100 units @ 216
May 14 Purchase 50 units @ $224
May 22 Purchase 60 units @ $ 234
May 30 sale 200 units
May 31 Ending inventory 70 units
Answers
For easy calculation we should run an inventory balance after every transaction. I have solved using the average cost method. Hope it helps you.
Average-cost method:
Units
Unit Cost
Total
April
Beginning inventory (Apr 1)
50
204
10,200
Purchases (Apr 10)
100
220
22,000
Total
150
32,200
Average cost = 32 200 / 150 = 214.67
Sales - COGS (Apr 17)
90
214.67
19,320
Ending inventory (Apr 30)
60
214.67
12,880
Total
150
32,200
May
Beginning inventory (May 1)
60
214.67
12,880
Purchases (May 2)
100
216
21,600
Purchases (May 14)
50
224
11,200
Purchases (May 22)
60
234
14,040
Total
270
59,720
Average cost = 59 720 / 270 = 221.19
Sales - COGS (May 30)
200
221.19
44,237
Ending inventory (May 31)
70
221.19
15,483
Total
270
59,720