Ziad Company had a beginning inventory on January 1 of 330 units of Product 4-18-15 at a cost of...

Question:

Ziad Company had a beginning inventory on January 1 of 330 units of Product 4-18-15 at a cost of $21 per unit. During the year, the following purchases were made.

Mar. 15880 units at $24
July 20550 units at $25
Sept. 4770 units at $27
Dec. 2220 units at $31

2,200 units were sold. Ziad Company uses a periodic inventory system.

a. Determine the cost of goods available for sale.

b. Calculate average cost per unit.

c. Determine (1) the ending inventory, and (2) the cost of goods sold under each of the assumed cost flow method (FIFO, LIFO, and average)

d. Which cost flow method results in (1) the highest inventory amount for the balance sheet, and (2) the highest cost of goods sold for the income statement?

The Cost of Goods Sold (COGS):

COGS is the actual cost/worth of goods that the company had sold. It is useful to determine the company's gross profit and find certain efficiency ratios by analyzing its financial activities to reach a proper conclusion about the company's performance.

Answer and Explanation: 1

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a. Cost of goods available for sale: $69,410

b. Average cost per Unit: $25.24

Workings for part a. & b.:

Date Particulars $
January 1Beginnin...

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Inventory Valuation Methods: Specific Identification, FIFO, LIFO & Weighted Average

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Chapter 6 / Lesson 11
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Inventory valuation methods are ways that companies place a monetary value on the items they have in their inventory. Discover different inventory valuation methods, including specific identification, First-In-First-Out (FIFO), Last-In-First-Out (LIFO), and weighted average.


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