The following transactions took place during January 2016 at Dunes Corp. The opening inventory consisted of 100 units at a total cost of $100.
|
Units |
Total cost |
|||
|
Jan. |
5 |
Purchase #1 |
100 |
$100 |
|
9 |
Purchase #2 |
200 |
400 |
|
|
16 |
Purchase #3 |
300 |
900 |
|
|
26 |
Purchase #4 |
400 |
1,600 |
Units sold during the month were as follows:
|
Units |
Amount |
|||
|
Jan. |
10 |
Sale #1 |
200 |
$600 |
|
17 |
Sale #2 |
500 |
1,500 |
Assume a periodic inventory system is used.
Required:
- Calculate the cost of ending inventory and the cost of goods sold under each of the following inventory cost flow assumptions:
- FIFO
- Weighted average
- Specific identification (assume that the 700 units sold were 100 units from opening inventory, the 200 units purchased on January 9, and the 400 units purchased on January 26).
- State your observations about the relative effects on ending inventory and net income using each of the cost flow assumptions in a period of rising prices.
- 1416 reads
