The following transactions relate to a computer game sold by Wiley Louvres Ltd for the period 1 January to 31 December 2016:

1 Determine the cost of ending inventory as at 31 December 2016 and the COGS for the year ended 31 December 2016, assuming:

a. A periodic system and the FIFO method

b. A periodic system and the LIFO method

c. A perpetual system and the LIFO method

d. A perpetual system and the FIFO method.
Show supporting calculations for each case.
2. As the above data show, no units of the computer game were sold in the last four months of the year. The marketing manager is concerned that the cost of the remaining games will not be recovered. Explain what effect, if any, there would be on the financial statements if the following occurred:

a. The net realisable value of the game, as at 31 December, was estimated at $152 per unit and LIFO was used in conjunction with the perpetual system.

b. The net realisable value of the game, as at 31 December, was estimated at $155 per unit and FIFO was used in conjunction with the periodic system.

c. The net realisable value of the game, as at 31 December, was estimated at $152 per unit and LIFO was used in conjunction with the periodic system.
Show calculations to support your answers.

Transcribed Image Text:

Date January 1 March 3 April 9 May 10 August 22 Transaction Beginning inventory - 4 units @ $150 Purchased 5 units @ $160 Sold 6 units Purchased 5 units @ $165 Sold 4 units