Answered: Inventory Costing Methods—Perpetual…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter6: Cost Of Goods Sold And Inventory

Section: Chapter Questions

Problem 50E: Inventory Costing Methods Crandall Distributors uses a perpetual inventory system and has the...

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Inventory Costing Methods—Perpetual Method

Chou Sales Corporation uses the perpetual inventory system. On January 1, 2018, Chen had 1,000 units of product A with a unit cost of $20 per unit. A summary of purchases and sales during 2018 follows:

	Unit Cost	Units Purchased	Units Sold
Feb.2			400
Apr.6	$22	1,800
July 10			1,600
Aug.9	25	800
Oct.23			800
Dec.30	28	1,400

Required
a. Assume that Chou uses the first-in, first-out method. Compute the cost of goods sold for 2018 and the ending inventory balance at December 31, 2018, for product A.

b. Assume that Chou uses the last-in, first-out method. Compute the cost of goods sold for 2018 and the ending inventory balance at December 31, 2018, for product A.

c. Assume that Chou uses the weighted-average cost method. Compute the cost of goods sold for 2018 and the ending inventory balance at December 31, 2018, for product A. Do not round until your final answers. Round to the nearest dollar.

a.	First-In, First-Out
	Ending Inventory	Answer
	Cost of goods Sold	Answer
b.	Last-In, First-Out
	Ending Inventory	Answer
	Cost of Goods Sold	Answer
c.	Weighted Average
	Ending Inventory	Answer
	Cost of Goods Sold	Answer

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