Unit 4 Assignment

Tesco Corp. sells gadgets and uses the perpetual inventory system. During the month of January 2018, the number of gadgets purchased and sold was as follows:

Purchases:

Jan 1

300 units at $3.50

Jan 3

500 units at $4.50

Jan 8

100 units at $5.00

Jan 15 100 units at $5.50

Jan 27 100 units at $6.00

Sales:

Jan 10 400 units* Jan 20 200 units**

• For specific identification, sold 150 units of January 1 purchase, 150 units of the January 3 purchase and 100 from January 8 purchase.
• *For specific identification, sold 50 units of January 1 purchase and 150 units from January 3 purchase.

Assume the January 10 units were sold on account for $20 each, and the January 20 units were sold on account for S22 each.

Required:

1. Complete the inventory record card, and calculate cost of goods sold and the cost of ending inventory under each of the following inventory cost flow assumptions:

a.

FIFO

b.

Specific identification

C.

Weighted average

1. Prepare the journal entries required to record purchases and sales using the FIFO inventory cost flow assumption.
2. Create a table that compares the Cost of Goods Sold and Ending Inventories under FIFO, Specific Identification and Weighted Averages. Explain why the results are different.