Cost & Management Accounting Material Lecture-7 Mian Ahmad Farhan (ACA)

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Cost & Management Accounting Material Lecture-7 Mian Ahmad Farhan (ACA)

Inventory Maintenance System Perpetual Inventory System Continuous record for each inventory item.

Inventory Maintenance System Periodic inventory System or Physical system Does not keeps a continuous record of inventory on hand.

Entries Perpetual SystemPeriodic System At credit purchase Inventory Accounts payable At credit purchase Purchases Accounts payable At credit sales a- Accounts receivable Sales revenue b- COGS Inventory At credit sales Accounts receivable Sales revenue

Entries End of the period entries No entry will be record at the end of period End of the period entries a- Profit & Loss Beginning inventory b- Ending inventory Profit & Loss

Problem Date Units Total 1 Jan 10Rs Jan Average Price = 2200 / 200 = 11

Problem Unit sold 150 Whether remaining units are: 10 = = = 550

Inventory Costing FIFO First In First Out LIFOLast In First Out W.Avg. Weighted Average

Problem Date Units Total 1 Jan 10Rs Jan Average Price = Total Cost / Total units Average Price = 2200 / 200 = 11

Problem Perpetual System James & company is a manufacturing concern. Following is the receipts & issues record for the month of January, 2002 DateReceipts Issues Jan 1 Opening Balance 40 Jan Rs. 50/unit Jan units Jan Rs. 60/unit Jan Rs. 75/unit Jan units Prepare Inventory sheets under:  FIFO Method  LIFO Method  Average cost Method