Periodic Inventory System
Armstrong Creation Uses a Periodic Inventory System

question 22

Essay

Periodic inventory system
Armstrong Creation uses a periodic inventory system. During the current year, the company purchased goods at a cost of $245,000. You are to compute the cost of goods sold under each of the following alternative assumptions: $$\begin{array} { | l | l | l | } \hline & & \text { Cost of Goods Sold } \\\hline \text { A } & \text { No beginning inventory; ending inventory } \$ 18,000 \ldots \ldots \ldots \ldots \ldots \ldots & \$ \\\hline \text { B } & \text { Beginning inventory } \$ 15,000 \text {; no ending inventory } \ldots \ldots \ldots \ldots \ldots \ldots & \$\\ \hline \text { C } & \text { Beginning inventory } \$ 12,000 \text {; ending inventory, } \$ 9,000 \ldots \ldots \ldots & \$ \\\hline \text { D } & \text { Beginning inventory } \$ 11,000 \text {; ending inventory } \$ 17,000 \ldots \ldots \ldots \ldots & \$ \\\hline & & \$ \\\hline\end{array}$$

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Definitions:

Total Utility

The total satisfaction received from consuming a particular quantity of goods or services.

Real Income

The amount of goods and services that can be purchased with nominal income during some period of time; nominal income adjusted for inflation.

Increase in Price

A rise in the cost of goods or services, often due to factors like inflation, increased demand, or production costs.

Budget Line

A graphical representation of all possible combinations of two goods that can be purchased with a given budget at set prices.