Whats perpetual inventory?

3 answers
Question:

Whats perpetual inventory?

Answers

Explanation:

Permanent inventory is a method of inventory accounting that records the immediate sale or purchase of inventory through the use of computerized point-of-sale (POS) systems and enterprise asset management software.

Hope this helps..

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1. FIFO method

A. Cost of Goods sold is $24,330

B. Ending inventory is $6,020

C. Gross profit is $8,390

2. LIFO method

A. Cost of goods sold is $25,800

B. Ending inventory is $4,550

C. Gross profit is $6,920

3. WA method

A. Cost of goods sold is $24,655

B. Ending inventory is $5,695

C. Gross profit $8,065

4. If the business wanted to pay least taxes, they should use LIFO method of inventory costing

Explanation:

1. Using FIFO method of inventory costing, the cost of goods sold is computed as follows:

Jan 05 sale 140 crates

90 @ 65 = 5,850

50 @ 76 = 3,800

Total $9,650

Jan 27 sale 180 crates

80 @ 76 = 6,080

100 @ 86 = 8,600

Total $14,680

Therefore, $9,650 + $14,680 = $24,330

2. Inventory end using FIFO method

Beg 90 crates add total purchases of 300 crates total available crates is 390 less crates sold of 320 makes the inventory end reduce to 70 crates @ 86. Total amount of inventory at hand is 6,020.

3. Gross profit using FIFO method is computed as follows:

Total sales

Jan 05, 140 @ 100 = $14,000

Jan 27, 180 @ 104 = $18,720

Total amount of sales $32,720

Next, let’s deduct the computed cost of goods sold from total sales to arrive the gross profit. $32,720 - $24,330 = $8,390 (answer)

2. LIFO method (last purchases crates will be sold first)

Cost of goods sold:

Jan 05

130 @ 76 = 9,880

10 @ 65 = 650

total $10,530

Jan 27

170 @ 86 = 14,620

10 @ 65 = 650

total 15,270

total cost of goods sold $25,800

B. Ending inventory at hand using LIFO method

Beg inventory of 90 crates plus total purchases of 300 crates. Total available crates is 390 less total crates sold of 320 makes the ending inventory at hand reduce to 70 crates. Units per crates under this method is the oldest inventory per unit. This is because, under this method, all units sold are those purchased recently. So 70 crates x 65 = $4,550

C. Gross profit using LIFO

To compute the gross profit let’s deduct the cost of good sold computed above from the sales we already computed also.

Sales $32,720

less: COGS $25,800

Gross profit is $6,920

3. WEIGHTED AVERAGE method

Using this method, please refer to the attached file for more clear explanation.

4. If the business wants to pay least tax, they should choose the method that has the least per unit cost of ending inventory at hand. Due to least amount of inventory at hand the cost of goods sold is higher which leads to lesser gross profit reported which result to least amount of tax liability.


[tex]Fit world began january with merchandise inventory of 90 crates of vitamins that cost a total of $ 5[/tex]
[tex]Fit world began january with merchandise inventory of 90 crates of vitamins that cost a total of $ 5[/tex]
[tex]Fit world began january with merchandise inventory of 90 crates of vitamins that cost a total of $ 5[/tex]

Refer explanation

Explanation:

1st Oct : Beginning inventory : 12 units x $42 = $504

16th Oct : Purchases : 40 units x $68 = $2,720

31st Oct : Sales : 34 units x $100 = $3,400

Total inventory = 12 + 40 = 52 units

A. FIFO (First-In-First-Out) is a method of inventory valuation where the stock that is purchased first is used first. In other words, the oldest stock is used first. This is common for perishable items which if not used up fast, will be wasted.

The cost of goods sold using FIFO:

12 units x $42 = $504

22 units x $68 = $1496

COGS = $1496 + $504 = $2000 (34 units)

Ending inventory :

(40 - 22) x $68 = $1,224 (18 units)

B. LIFO (Last-In-First-Out) is a method of inventory valuation where the inventory that is received last is sold first. This is common for bulk goods that are stacked one on top of the other.

The cost of goods sold using LIFO:

34 units x $68 = $2312

COGS = $2312 (34 units)

Ending inventory:

(40 - 34) x $68 = $408

12 units x $42 = $504

Ending inventory : $408 + $504 = $912 (18 units)

Double entry for Oct 16, purchase of merchandise...

Oct 16 : Purchases account : $2720 (Dr)

Oct 16 : Accounts Payables account : $2720 (Cr)

Double entry for Oct 31 sale of merchandise...

Oct 31 : Accounts Receivables account : $3,400 (Dr)

Oct 31 : Sales : $3,400 (Cr)

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