Beginning inventory xx

Purchases xx
Add: Freight-in xx
Less: Purchase return xx
Purchase allowance xx
Purchase discount xx
Net Purchases xx
Goods available for sale xx
Less: Ending Inventory xx
Cost of sales xx

“first purchased, first sold…”

Note well that under FIFO-periodic and
FIFO perpetual, the inventory costs are
the same.
On April 1, 2011, Toronto Company had 6,000 units of
merchandise on hand that cost P120 per unit. During the
month, Toronto had the following entries with regard to
the merchandise:
April 5 Purchased on account 15,000 units at P140
per unit
 April 8 Returned 1,000 units from the April 5
purchase
April 29 Sold on account 16,000 units at P200
per unit

Toronto Company uses a perpetual inventory system and

a FIFO cost flow. What is the cost of goods sold for
April?
A. 2,120,000
B. 2,200,000
C. 2,144,000
D. 2,080,000

Note:
o The average unit cost is multiplied to ending inventory
units to get the cost of ending inventory

o In order to get the cost of goods sold, cost of ending

inventory is deducted from cost of goods available for sale
The following information was taken from the inventory records of
Fairie Company for January of the current year:
Units Unit Cost Total Cost
Balance, Jan 1 50,000 8.024
401,200
Purchases:
Jan 10 20,000 8.500
170,000
Jan 25 48,000 8.750
420,000
Sales:
 Jan 12 30,000
Jan 30 53,000
Fairie Company does not maintain perpetual inventory records.
What is the inventory on January 31 under the weighted average
method?
A. 294,000 C. 297,850
B. 294,700 D. 301,880

Note:
o Popularly known as “Moving Average” method

o The moving average unit cost changes every time

there is a new purchase or a purchase return

o The moving average unit cost is not affected by a sale

or a sale return
Anders Company uses the moving average method to
determine the cost of its inventory. During January of
the current year, Anders recorded the following
information pertaining to its inventory:
Units Unit cost Total Cost
Balance, Jan 1 40,000 50 2,000,000
Sold on Jan 17 35,000
Purchased on Jan 28 20,000 80
1,600,000
What amount of inventory should Anders report on
January 31?
2,000,000
 1,850,000
1,625,000
1,500,000
o The standard provides that this method is appropriate
for inventories that are segregated for a specific project
and inventories that are not ordinarily interchangeable.

o May be used in either periodic or perpetual inventory

system.

o Involves keeping track of the purchase price of each

unit available for sale and pricing the ending inventory at
the actual prices of the specific units not sold