ACCT 210 Chapter 8 Assignment

Wael H. Brome
201403364

Assignment Chapter 8
Exercise 8.7
a) Weighted average cost $79.60 (20 units @ $3.98). (Weighted average cost = $438/110 units = $3.98)
b) FIFO, $99.00 (19 units @ $5.00 + 1 unit @ $4.00).
c) Only the FIFO method results in the same ending inventory valuation in both periodic and perpetual costing environments. Under the weighted average cost method, periodic and perpetual systems usually result in different valuations due to the timing of inventory purchases and sales. Under FIFO, the value assigned to ending inventory is the same using periodic or perpetual procedures, regardless of when purchases or sales occur during the period.

Problem 8.2B
a) Cost of goods sold and ending inventory (1) Weighted average cost method:

a) Cost of goods sold on 28 April:

Weighted average cost (as of 28 April; $730,000 ÷ 9 units) $ 81,111 Cost of goods sold (5 units @ $81,111) $ 405,555

b) Ending inventory (7 units) at 30 June:

Weighted average unit cost following 19 April purchase:

4 units at 19 April weighted average cost of $81,111 $ 324,445 3 units purchased on 8 May at $85,000 each 255,000 Total $ 579,445 Weighted average unit cost as of 8 May ($579,445 ÷ 7 units) $ 82,778

Ending inventory, 30 June (7 units @ $82,778) $ 579,445

(2) First-in, first-out (FIFO) method:

a) Cost of goods sold on 28 April:

4 units from 1 April purchase @ $80,000 $ 320,000 1 unit from 19 April purchase @ $82,000 82,000 Cost of goods sold (5 units)

$ 402,000

b) Ending inventory (7 units) at 30 June: