QP Corporation sold 4,000 units of its product at $50 per unit during the year and incurred operating expenses of $5 per unit in selling the units. It began the year with 700 units in inventory and made successive purchases of its product as follows. January 1 February 20 May 16 October 3 December 11 Beginning inventory Purchase Purchase Purchase Purchase Total 700 units @ $18 per unit 1,700 units @ $19 per unit 800 units @ $20 per unit 500 units @ $21 per unit 2,300 units @ $22 per unit 6,000 units Required: 1. Prepare comparative year-end income statements for the three inventory costing methods of FIFO, LIFO, and weighted average which includes a detailed cost of goods sold section as part of each statement. The company uses a periodic inventory system. (Round your average cost per unit to 2 decimal places and round your final answers to nearest whole dollar amount.)
QP Corporation sold 4,000 units of its product at $50 per unit during the year and incurred operating expenses of $5 per unit in selling the units. It began the year with 700 units in inventory and made successive purchases of its product as follows. January 1 February 20 May 16 October 3 December 11 Beginning inventory Purchase Purchase Purchase Purchase Total 700 units @ $18 per unit 1,700 units @ $19 per unit 800 units @ $20 per unit 500 units @ $21 per unit 2,300 units @ $22 per unit 6,000 units Required: 1. Prepare comparative year-end income statements for the three inventory costing methods of FIFO, LIFO, and weighted average which includes a detailed cost of goods sold section as part of each statement. The company uses a periodic inventory system. (Round your average cost per unit to 2 decimal places and round your final answers to nearest whole dollar amount.)
Century 21 Accounting General Journal
11th Edition
ISBN:9781337680059
Author:Gilbertson
Publisher:Gilbertson
Chapter20: Accounting For Inventory
Section: Chapter Questions
Problem 3AP
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Step 1
Periodic Inventory System:
Under this system,entire stock is verified at a time at periodic intervals. So stock taking at the end of the year is called periodic stock taking or periodic inventory system.The entire materials are physically counted and the value of closing stock is ascertained for the purpose of final accounts preparation.Different methods are used for stock valuation.
1.FIFO : In this method,materials received first are issued first.
2.LIFO: In this case ,materials received last are issued first.It is just opposite to FIFO method.
3.Weighted average method: Here average cost is used for inventory valuation.
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