Samuelson and Messenger SM began 2018 with 200 units of its

Samuelson and Messenger (S&M) began 2018 with 200 units of its one product. These units were purchased near the end of 2017 for $25 each. During the month of January, 100 units were purchased on January 8 for $28 each and another 200 units were purchased on January 19 for $30 each. Sales of 125 units and 100 units were made on January 10 and January 25, respectively. There were 275 units on hand at the end of the month. S&M uses a perpetual inventory system.

Required:
1. Complete the below table to calculate ending inventory and cost of goods sold for January using FIFO method.
2. Complete the below table to calculate ending inventory and cost of goods sold for January using average cost method.

Solution

Calculation of Ending Inventory: FIFO Date Purchases Sales Balance Units PU Total Cost Units PU Total Cost Units PU Total Cost Opening Inventory 200 25 5,000 08-Jan 100 28 2,800 200 25 5,000 100 28 2,800 10-Jan 125 25 3,125 75 25 1,875 100 28 2,800 19-Jan 200 30 6,000 75 25 1,875 100 28 2,800 200 30 6,000 25-Jan 75 25 1,875 75 28 2,100 25 28 700 200 30 6,000 Total 500 13,800 225 5,700 275 8,100 Closing Stock 275 8,100 Calculation of Ending Inventory: Average Cost Method Date Purchases Sales Balance Units PU Total Cost Units PU Total Cost Units PU Total Cost Opening Inventory 200 25 5,000 08-Jan 100 28 2,800 300 26 7,800 10-Jan 125 26 3,250 175 26 4,550 19-Jan 200 30 6,000 375 28.13 10,550 25-Jan 100 28 2,813 275 28 7,737 Total 500 13,800 225 6,063 275 7,737 Closing Stock 275 7,737