Key Terms
What kind of shipping point is it if buyer pays freight cost?
FOB Shipping Point
How do you calculate unit cost?
Total Cost / Total units
What does FIFO stand for?
First in First Out
In Specific Identification inventory is marked, tagged, and coded with what?
The inventory's specific unit cost.
Assume your company purchased 100 units of inventory on account.
What 2 accounts will be effected?
Merchandise Inventory
Accounts Payable
What Kind of shipping is it if the seller pays freight cost?
FOB Destination
The inventory for The Boyo Company for the month ended December 30.
Apply perpetual weighted average.
How many units are in the ending inventory?
Units Unit Cost
Dec 1. Beginning Inventory 50 $40
Dec 10. Purchase 75 $45
Dec 13. Sale (100)
Ending Inventory
25
The inventory for The Parky Company for the month ended January 31st.
Apply perpetual FIFO.
How many units are in the ending inventory?
Units Unit Cost
Jan 1. Beginning Inventory 20 $5
Jan 15. Purchase 30 $10
Jan 20. Sale (10)
Ending Inventory
40
What does Specific Identification Track?
The actual Physical flow of goods in the perpetual Inventory System.
Determine the Cost of Goods Sold amount using WWA
Units Cost
Purchase 20 $10
Sale (5)
$50
Goods held for sale that belong to another party
Consigned Goods
The inventory for The Boyo Company for the month ended December 30.
Apply perpetual weighted average.
What is the unit cost of the ending inventory?
Units Unit Cost
Dec 1. Beginning Inventory 50 $20
Dec 10. Purchase 50 $10
Dec 13. Sale (20)
Ending Inventory
$15
The inventory for The Parky Company for the month ended January 31st.
Apply perpetual FIFO.
What is the total unit cost of the ending inventory?
Units Unit Cost
Jan 1. Beginning Inventory 20 $5
Jan 15. Purchase 30 $10
Ending Inventory
$400
When should Specific Identification be used?
When the products are unique or have significantly differently costs and sale prices.
Assume there is a shortage at the end of your companies inventory count.
What 2 accounts will you use to record the shortage?
Cost of Goods Sold
Merchandise Inventory
What kind of system is continuously updated, reducing end of period adjusting entries.
Perpetual Inventory System
The inventory for The Boyo Company for the month ended December 30.
Apply perpetual weighted average.
What is the cost of goods sold?
Units Unit Cost
Dec 1. Beginning Inventory 50 $20
Dec 10. Purchase 50 $10
Dec 13. Sale (20)
Ending Inventory
$300
The inventory for The Parky Company for the month ended January 31st.
Apply perpetual FIFO.
What is the cost of goods sold?
Units Unit Cost
Jan 1. Beginning Inventory 20 $5
Jan 15. Purchase 30 $10
Jan 20. Sale (10)
Ending Inventory
$50
True/False
If we were counting one of a kind paintings we would use FIFO
False
Assume your company sold 100 units on account.
What 4 accounts will be effected
Accounts Receivable
Sales
Cost of Goods Sold
Merchandise Inventory
A liquidity measure of the number of times, on average, that inventory is sold during the period.
inventory turnover
The inventory for The Boyo Company for the month ended December 30.
Apply perpetual weighted average.
If the sale price of the units was $50
What is the gross profit margin?
Units Unit Cost
Dec 1. Beginning Inventory 50 $20
Dec 10. Purchase 50 $10
Dec 13. Sale (20)
Ending Inventory
$700
The inventory for The Parky Company for the month ended January 31st.
Apply perpetual FIFO.
If the sale price of the units was $20
What is the gross profit margin?
Units Unit Cost
Jan 1. Beginning Inventory 20 $5
Jan 15. Purchase 30 $10
Jan 20. Sale (10)
Ending Inventory
$150
Determine the Cost of Goods sold using Specific Identification.
Date Explanation Model Serial# Unit Cost SP$
Nov1 Inventory Cadillac C63825 $14,000
Cadillac C81362 $20,000
BMW X3892 $25,000
Sales Cadillac C81362 $22,000
BMW X3892 $33,000
$45,000
Determine the amount of Cost of Goods Sold and Merchandise Inventory adjustments using WWA for the following:
Units Cost
Purchases 150 $10
Sales (100)
$1000