## Answers

Perpetual inventory System: In this system, the cost of sales and invenries are updated on every sales and purchase transactions. Periodic inventory System: In this system, the cost of sales and inventory are determined as the end of the accounting period. First in, first out method (FIFO): In this method it is assumed that inventory which is purchased first will be sold first and the inventory will consist of recent purchases. $15 $23 3000 Date Transaction Quantity Rate 1/1 inventory 2000 2/4 Purchase 4/2 Purchase 4000 Total 9000 Average Cost per unit ($215000/9000] Total $30,000 $69,000 $1,16,000 $2,15,000 $23.8889 $29 Ans a: Cost of Goods Sold Periodic FIFO Date Transaction Quantity Rate 1/1 inventory 2000 2/4 Purchase 4/2 Purchase 1700 Cost of Good Sold 6700 3000 $15 $23 $29 Total $30,000 $69,000 $49,300 $1,48,300

2/4 Ans b: Cost of Goods Sold Perpetual FIFO Purchase Cost of Merchandise Sold inventory Date 1 Unit Rate Total Unit Rate Total Unit Rate Total 1/1 2000 $15.00 $30,000.00 3000 $23.00 $69,000.00 $0.00 2000 $15.00 $30,000.00 3000 $23.00 $69,000.00 5000 $99,000.00 2/20 $0.00 2000 $15.00 $30,000.00 1500 $23.00 $34,500.00 1500 $23.00 $34,500.00 3500 $64,500.00 4000 $29.00 $1,16,000.00 1500 $23.00 $34,500.00 4000 $29.00 $1,16,000.00 5500 $1,50,500.00 11/4 $0.00 1500 $23.00 $34,500.00 2300 $29.00 $66,700.00 1700 $29.00 $49,300.00 3200 $83,800.00 1 7 000 $1,85,000.00 6700 $1,48,300.00 2300 $66,700.00 Cost of Good Sold $1,48,300.00 Last in, first out method (LIFO): In this method it is assumed that inventory which is purchased last will be sold first and the inventory will consist of old purchases. Ans c: Cost of Goods Sold Periodic LIFO Date Transaction Quantity Rate Total Purchase 2700 $23 $62,100 4/2 Purchase 4000 $29 $1,16,000 Cost of Good Sold 6700 $1,78,100 2/4

Ans d: Cost of Goods Sold Perpetual LIFO Purchase Date Unit Rate 1/1 Cost of Merchandise Sold Unit Rate Total Total Unit 2000 inventory Rate $15.00 Total $30,000.00 2/4 3000 $23.00 $69,000.00 $0.00 2000 3000 5000 $15.00 $23.00 $30,000.00 $69,000.00 $99,000.00 2/20 $0.00 1500 $15.00 $22,500.00 3000 500 3500 $23.00 $15.00 $69,000.00 $7,500.00 $76,500.00 4000 $29.00 $1,16,000.00 $0.00 $0.00 1500 4000 5500 $15.00 $29.00 $22,500.00 $1,16,000.00 $1,38,500.00 $0.00 3200 $29.00 $92,800.00 $0.00 15001 800 2300 $15.00 $29.00 $22,500.00 $23,200.00 $45,700.00 7000 6700 $1,69,300.00 2300 $45,700.00 $1,85,000.00 $1,69,300.00 Cost of Good Sold

1/1 2/4 In weighted average cost method per unit purchase is derived by adding cost opening inventory and purchase made during the year and then dividing it by the adding the units of opening inventory and units purchased during the year Ans e: Cost of Goods Sold Periodic FIFO Date Transaction Quantity Rate Total inventory 2000 $15 $30,000 Purchase 3000 $23 $69,000 4/2 Purchase 4000 $29 $1,16,000 Cost of Good Sold 9000 $2,15,000 Average Rate [$215000/9000] $23.8889 Cost of Good Sold for 6700 units (6700 x $23.8889] $1,60,056 Ans f: In moving average cost method transactionwise per unit cost is derived by adding cost of inventory and purchase made daywise and then dividing it by the adding the units of inventory and units purchased daywise.

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Cost of Goods Sold Perpetual Moving Average Purchase Cost of Merchandise Sold inventory Date Unit Rate Total Unit Rate Total Unit Rate Total 1/1 2000 $15.0000 $30,000.0000 3000 $23.0000 $69,000.0000 $0.00 2000 $15.0000 | $30,000.0000 3000 $23.0000 $69,000.0000 Average 5000 $19.8000 $99,000.0000 $0.00 3500 $19.8000 $69,300.0000 1500 $19.8000 $29,700.0000 4/2 4000 $29.0000 $1,16,000.0000 $0.00 1500 $19.8000 $29,700.0000 $0.00 4000 $29.0000 $1,16,000.0000 Average 5500 $26.4909 $1,45,700.0000 11/4 $0.00 3200 $26.4909 $84,770.8800 2300 $26.4909 $60,929.0700 7000 $1,85,000.00 6700 $1,54,071.00 $60,929.00 Cost of Good Sold $1,54,071.00 2/4 2/20 2300

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