Samuelson and Messenger (SAM) began 2021 with 240 units of its one product. These units were purchased near the end of 2020 for $25 each. During the month of January, 120 units were purchased on January 8 for $28 each and another 240 units were purchased on January 19 for $30 each. Sales of 150 units and 125 units were made on January 10 and January 25, respectively. There were 325 units on hand at the end of the month. SAM uses a periodic inventory system.

Required:

1. Calculate ending inventory and cost of goods sold for January using FIFO method.

2. Calculate ending inventory and cost of goods sold for January using average cost method.

Sales of 125 units (from 90 units left from purchase near the end of 2020 for $25 each and 35 units from 120 units purchased on January 8 for $28 each).

= 90 x $25 = $2,250 + (35 x $28)

=$2250+$980= $3230 (cost of inventory sold)

Ending inventory

= 120-35 + 240

= 365 units

2. Total purchase= 600 units

Total cost= $10,080

Total sales= 275 units

Average cost of inventory= 10080/600 = $16.8

Ending inventory= 600 units - Total sales

= 600-275 = 325 units