Graphic Artz Co. Uses a perpetual inventory system and had the following beginning inventory and purchases during January 20XX.

Date		Units	Unit cost	Total Cost
Jan 1	Beginning Inventory	300	$14	$4,200
Jan 16	Purchase	200	$15	$3,000
Jan 20	Purchase	300	$16	$4,800
Total Units		800		$12,000

Sales of units were as follows (all on credit):

Date	Units	Sale price
Jan 15	200	$30
Jan 28	460	$35
Total Units sold	660

Additional data for use in applying the specific ID method:

The specific items sold were:

Date	Units Sold
Jan 15	200 Units from the January 1 units on hand
Jan 28	75 units from the January 1 units on hand 150 units from the January 16 purchase 235 units from the January 20 purchase

1. Calculate the ending inventory and the cost of goods sold under a perpetual inventory system applying each of the three different methods of inventory costing

1. FIFO 5 marks

2. Weighted-Average 5 marks

3. Specific ID 5 marks

2. Using your calculations from part 1, record the purchase on January 16 and the sale on January 28 for each of:

1. FIFO 2 marks

2. Weighted Average 2 marks

3. Specific ID 2 marks

Analysis 4 marks

A new supplier has approached Graphic Artz Co., offering to supply the merchandise inventory at a cost of $11 per unit. What should the company consider when deciding whether or not to change to the new supplier?

Planning the solution

• Prepare an inventory valuation schedule for each method of costing inventory

• Journalize the purchase on January 16 and the sale on January 28 by taking the relevant information from the inventory valuation charts you created (COGS) and the charts given (sales prices), for each method.

• Answer the analysis question.