Plamondon Products Corp. sells widgets and uses the perpetual inventory system. During the month of March 2016, the number of widgets purchased and sold was as follows:
|
Purchased |
Sold |
Balance in Inventory |
||||||||
|
Date |
Units |
Unit cost |
Total $ |
Units |
Unit cost |
Total $ |
Units |
Unit cost |
Total $ |
|
|
Mar. 1 |
1,000 | $11 | $1,000 | |||||||
| 3 |
1,000 |
$10 |
$10,000 |
|||||||
|
*8 |
1,500 |
|||||||||
|
10 |
2,000 |
$9 |
$18,000 |
|||||||
|
15 |
3,000 |
$8 |
$24,000 |
|||||||
|
**20 |
5,000 |
|||||||||
|
27 |
2,000 |
$10 |
$20,000 |
|||||||
|
***29 |
2,000 |
|||||||||
* for specific identification, sold 800 units of opening inventory and 700 units of the March 3 purchase
**for specific identification, sold 200 units of the March 3 purchase, 1,800 units of the March 10 purchase, and 3,000 units of the March 15 purchase
***for specific identification, sold 200 units of the March 10 purchase and 1,800 units of the March 27 purchase
Assume the January 8 units were sold on account for $15 each, the January 20 units were sold on account for $20 each, and the January 29 units were sold on account for $18 each.
Required:
- 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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