Meesha Novelty had a beginning inventory balance on July 1 of 400 units at a cost of $3 each. During the month, the following inventory transactions took place:

Instructions
(a) Calculate the cost of goods available for sale and the number of units of ending inventory.
(b) Assume Meeshauses FIF Operiodic. Calculate the cost of ending inventory, cost of the goods sold, and gross profit.
(c) Assume Meesha uses FIFO perpetual. Calculate the cost of ending inventory, cost of goods sold, and gross profit.
(d) Prepare journal entries to record the July 10 purchase and the July 11 sale using
(1) FIFO periodic and
(2) FIFO perpetual. Assume both the sale and purchase were for cash.
(e) Compare the results of parts (b) and (c) above and comment.
Taking It Further
Companies are required to disclose their cost determination method, but not the inventory system (periodic or perpetual). Provide an explanation as to why.

Transcribed Image Text:

Sales Purchases Date July 2 28 Units 300 1,000 400 Price per unit $6.00 6.00 6.50 Date Units Cost per unit July 10 13 27 1,300 700 600 3.10 3.40 3.75