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Chapter 6
Chapter 6
Chapter 6
Inventories
Merchandise inventory: includes all goods that a company owns and holds for
sale, regardless of where the goods are located when
inventory is counted.
Inventory systems
Perpetual Periodic
Inventory Inventory
System System
Note that :
4- Unlike, perpetual inventory system which computes the cost of goods sold
and ending inventory balance after each transaction.
2- FOB destination legal title to the goods remains with the seller
until the goods reach the buyer.
Multiple choice :
Note that :
Note that : to compute the ending inventory under any of these methods we
must use inventory equation in merchandising companies .
Note that :
The sum of Beg. Inv . and cost of goods purchased equals the cost
of goods available of sale " inventoriable costs "
Beg Inv + cost of goods purchased = ending inventory + cost of goods sold
Example :
Date Q P C Q P C Q P C
Mar 1 200 4 800
Mar 10 500 4.5 2,250 200 4 800
500 4.5 2,250
200 4 800 200 4.5 900
Mar 15 300 4.5 1,350
500 2,150
Mar 20 400 4.75 1,900 200 4.5 900
400 4.75 1,900
200 4.5 900 200 4.75 950
Mar 25 200 4.75 950
400 1,850
Mar 30 300 5 1,500 200 4.75 950
300 5 1,500
Total 1,200 $5,650 900 $4,000 500 $2,450
Note that :
C ) Specific identification
Weight average cost per unit = cost of goods available for sale
No . of units available