Cost of inventory for Jippy Juice
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From the excel document, the inventory records for jippy juice company rasperry juice cans
a) assuming a periodic inventory system, determine the cost of the ending inventory and the cost of goods sold using (i) FIFO (ii) Weighted average cost and (III) LIFO methods
b) Assuming a perpetual inventory system, determine the cost of the ending inventory and the cost of goods sold using (I) weighted average cost and (II) LIFO
c) Which method results in the highest cost of goods sold? Why?
d) Which method results in the highest ending inventory? Why?
e) Which method results in the highest cash flow? Why
f) Assume prices are expected to increase in the future. Which method would you recommend for Jippy Juice Company? Explain why.
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Solution Summary
This is a solution to a multi-part accounting problem involving an inventory system for jippy juice, a fictitious company.
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a) Assuming a periodic inventory system, determine the cost of the ending inventory and the cost of goods sold using (i) FIFO (ii) Weighted average cost and (III) LIFO methods
Assuming the periodic inventory system, FIFO ending inv is 2528 and if we subtract this from 4368 we get the cost of goods sold as 1840
Weighted Average Cost is determined by dividing 4368 by 2100 giving us 2.08 and multiplying it by 1200, this gives us the cost of inventory as 2496 and the COGS as 1872.
Using the LIFO, we get the value of the 13 sales as 630 and 30th sale as 1268 giving us the cost of inventory as 2470 and COGS as 1898.
b) Assuming a perpetual inventory system, determine the cost of the ending inventory and the cost of goods sold using (I) weighted average cost and (II) LIFO
Please note that in the perpetual system the ...
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