Inventory Flow Assumptions
Arrow, Inc On 24 January 2013, Arrow Sold 65 Units of This

question 39

Essay

Inventory flow assumptions
Arrow, Inc. uses a perpetual inventory system. On 22 January 2013, the company had 200 units of a particular product on hand, with a total cost of $2,400. The per-unit costs were:
$$\begin{array} { | l | c | c | c | } \hline { \text { Date } } & \begin{array} { c } \text { Purchase } \\\text { Quanitity }\end{array} & \begin{array} { c } \text { Unit Cost } \\( \$ )\end{array} & \begin{array} { c } \text { Total Cost } \\( \$ )\end{array} \\\hline \text { Erdirg invertory, 2009 } & 50 & 9 & 450 \\\hline \text { 10 Jan purchase } & \underline { 150 } & 13 & \underline { 1,950 } \\\hline \text { Total on hand } & \underline { 200 } & & \underline { 2,400 } \\\hline\end{array}$$ On 24 January 2013, Arrow sold 65 units of this product.
Using the two cost flow assumptions listed below, compute (1) the cost of goods sold, and (2) the cost of the inventory of this product on hand after this sale. Show your computations.
(c) Weighted average cost method
(d) FIFO

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Definitions:

U.S. Government Securities

Financial instruments issued by the United States Department of the Treasury to finance the federal government's operations, regarded as safe investments due to government backing.

Financial Crisis

A broad term for a situation where financial assets suddenly lose a large part of their nominal value.

Discount Rate

The interest rate charged by central banks on loans they provide to commercial banks.

Reserves Interest

Interest earned on reserves held by banks at the central bank, influencing monetary policy and banking operations.