Northgate Products Corp. sells gadgets and uses the perpetual inventory system. During the month of January 2016, the number of gadgets purchased and sold was as follows:
|
Purchased |
Sold |
Balance in inventory |
||||||||
|
Date |
Units |
Unit cost |
Total $ |
Units |
Unit cost |
Total $ |
Units |
Unit cost |
Total $ |
|
|
Jan. |
1 |
100 |
$1 |
|||||||
|
3 |
100 |
$1 |
||||||||
|
8 |
200 |
$2 |
||||||||
|
10 |
200* |
|||||||||
|
15 |
300 |
$3 |
||||||||
|
20 |
400** |
|||||||||
|
27 |
400 |
$1 |
||||||||
Assume the January 10 units were sold on account for $3 each, and the January 20 units were sold on account for $5 each.
*for specific identification, sold 50 units of opening inventory and 150 units of purchase #2
**for specific identification, sold 100 units of purchase #1 and 300 units from purchase #3
Required:
- Complete the inventory record card, and calculate cost of goods sold and the cost of ending inventory under each of the following inventory cost flow assumptions:
- FIFO
- Specific identification
- Weighted average.
- Prepare the journal entries required to record purchases and sales using the FIFO inventory cost flow assumption.
- Calculate the sum of cost of goods sold and ending inventory balances under each of the three assumptions. Explain the results.
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