Section (03) – Periodic System
Here is the information about the MF company inventory for the month of May:
Units purchased
May 05: 30 units @ L.E. 212
May 17: 40 units @ L.E. 230
May 25: 20 units @ L.E. 238
Units sold
May 15: 40 units @ unit selling price L.E. 260
May 31: 46 units @ unit selling price L.E. 300
If you know that there was an inventory at end of April of 20 units @ L.E.182 per
unit.
Required: Using the Three methods under periodic system:
1- Compute the cost of goods sold and the cost of ending inventory at end of May.
2- Prepare the entries to record the purchase and sale of inventory.
3- Prepare the income statement for the month of May if you know that the
operating expenses are L.E. 3,000.
Answer
(1)
FIFO
Date Purchases Cost of goods sold Balance
May 1 182*20=3640
May 5 30*212 182*20
212*30 =10000
May 15 20*182 10*212=2120
20*212= 7880
May 17 40*230 10*212
40*230 =11320
May 25 20*238 10*212
40*230
20*238= 16080
May 31 10*212 4*230
36*230= 10400 20*238= 5680
- Cost of good sold = 10400+7880 = 18280
- Ending inventory = 5680
LIFO
Date Purchases Cost of goods sold Balance
May 1 182*20=3640
May 5 30*212 182*20
212*30 =10000
May 15 20*182 10*182=1820
20*212= 7880
May 17 40*230 10*182
40*230 =11020
May 25 20*238 10*182
40*230
20*238= 15780
May 31 26*230 10*182
20*238= 10740 14*230=5040
Cost of goods sold = 10740+7880= 18620
Ending inventory = 5680
weighted average
Date Purchases Cost of goods sold Balance
May 1 182*20=3640
May 5 30*212 50*200=10000
May 15 4*200=8000 10*182=1820
May 17 40*230 50*224= 11200
May 25 20*238 70*228= 15960
May 31 46*228= 10488 24*228=5472
