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INVENTORY – PERIODIC INVENTORY SYSTEM

In a Periodic Inventory System, no effort is made to keep up – to – date records of either the inventory or the cost of goods sold. Instead, these amounts are determined only periodically __ usually at the end of each year. It is used by very small businesses having manual accounting systems.

Questions 1 – 3 (Meigns & Meigns), Question 4 (Fess & Warren)

Question 1:- Mach IV Audio uses periodic inventory system. One of the store’s most popular products is a minidisc car stereo system. The inventory quantities, purchases, and sales of this product for the most recent year are as follows:

| Number of units| Cost per unit| Total Cost|
Inventory – Jan 01| 10| Rs.299| Rs. 2990|
Purchases – May 12| 15| 306| 4590| Purchases – July 09| 20| 308| 6160| Purchases – Oct 04| 8| 315| 2520|
Purchases – Dec - 18| 19| 320| 6080| Goods available for sale| 72| | Rs. 22340|
Units sold during the year| 51| | |
Inventory| 21| | |

Instructions: Compute the cost of December 31 inventory and the cost of goods sold for the above mentioned product under each of the following cost flow assumptions: a. First-in, first-out
b. Last-in, first-out
c. Average cost (round to the nearest rupee, except unit cost)

Question 2: - Same three inventory valuation methods under periodic inventory system | Number of units| Cost per unit| Total Cost|
Inventory – Jan 01| 9| Rs. 3.00| Rs. 27.00|
Purchases 1| 12| 3.50| 42.00|
Purchases 2| 30| 3.80| 114.00|
Purchases 3| 40| 4.00| 160.00|
Purchases 4| 19| 5.00| 95.00|
Goods available for sale| 110| | Rs.438.00|
Units sold during the year| | | |
Inventory – Dec 31| 20| | |

Question 3: - Same three inventory valuation methods under periodic inventory system | Number of units| Cost per unit| Total Cost|
Beginning Inventory | 10| Rs. 80| Rs. 800|
First Purchases (Mar. 1)| 5| 90| 450|
Second Purchases (July 1) | 5| 100| 500|
Third Purchases (Oct. 1) | 5| 120| 600|
Fourth Purchases (Dec. 1) | 5| 130| 650|
Goods available for sale| 30| | Rs. 3,000|
Units in ending inventory| 12| | |
Units sold| 18| | |

Question 4: - Stewart Co.’s beginning inventory and purchases during the fiscal year ended March 31, 2012, were as follows: | | Units| Unit Cost Rs.| Total Cost Rs.|
April 01, 2011| Inventory| 1,000| 50.00| 50,000|
April 10, 2011| Purchases| 1,200| 52.50| 63,000|
May 30, 2011| Purchases| 800| 55.00| 44,000|
Aug 26, 2011| Purchases| 2,000| 56.00| 112,000|
Oct. 15, 2011| Purchases| 1,500| 57.00| 85,500|
Dec. 31, 2011| Purchases| 700| 58.00| 40,600|
Jan. 18, 2012| Purchases| 1,350| 60.00| 81,000| March 21, 2012| Purchases| 450| 62.00| 27,900| Total| | 9,000| | 504,000|
Stewart Co. uses the periodic inventory system, and there are 3,200 units of inventory on March 31, 2012. Determine the cost of ending inventory using the three costing methods. Practice Question (Fees & Warren)

Exer. 10-3 Page 366| Exer. 10-4 Page 366| Prob.10-3A Pg. 369| Prob.10-3B Pg 374|

INVENTORY – PERPETUAL INVENTORY SYSTEM

In a Perpetual Inventory system, merchandising transactions are recorded immediately as they occur. The system draws its name from the fact that the accounting records are kept perpetually up – to – date. This system is very easy to use. It is cost effective, & thus widely used because of the growing use of computerized accounting.

Question 1: - World Class Grocery Wholesalers performed the following transactions, all on credit, and all related to a particular chocolate bar. July 01 Beginning Inventory 23 units of Rs.4...
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