nventory Cost Flow Methods in Perpetual Inventory Systems

nventory Cost Flow Methods in Perpetual Inventory Systems -...

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nventory Cost Flow Methods in Perpetual Inventory Systems study objective 7 Apply the inventory cost flow methods to perpetual inventory records. Each of the inventory cost flow methods described in the chapter for a periodic inventory system may be used in a perpetual inventory system. To illustrate the application of the three assumed cost flow methods (FIFO, LIFO, and average cost), we will use the data shown in Illustration 6A-1 and in this chapter for Houston Electronics' Astro condensers. Illustration 6A- Inventoriable units and costs First-In, First-Out (FIFO) Under FIFO, the cost of the earliest goods on hand prior to each sale is charged to cost of goods sold. Therefore, the cost of goods sold on September 10 consists of the units on hand January 1 and the units purchased April 15 and August 24. Illustration 6A-2 shows the inventory under a FIFO method perpetual system.
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Illustration 6A- Perpetual system—FIFO The ending inventory in this situation is $5,800, and the cost of goods sold is $6,200 [(100 @ $10) + (200 @ $11) + (250 @ $12)]. The results under FIFO in a perpetual system are the
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nventory Cost Flow Methods in Perpetual Inventory Systems -...

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