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

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

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

4. 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

5. 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

6. Problem Date Units Total 1 Jan 100 @ 10Rs. 1000 15 Jan 100 @ 12 1200 2002200 Average Price = 2200 / 200 = 11

7. Problem Unit sold 150 Whether remaining units are: 50 @ 10 = 500 50 @ 12 = 600 50 @ 11 = 550

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

9. Problem Date Units Total 1 Jan 100 @ 10Rs. 1000 15 Jan 100 @ 12 1200 2002200 Average Price = Total Cost / Total units Average Price = 2200 / 200 = 11

10. 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 50 @ 40 Jan 8 200 units @ Rs. 50/unit Jan 11 60 units Jan 13150 units @ Rs. 60/unit Jan 18100 units @ Rs. 75/unit Jan 20150 units Prepare Inventory sheets under:  FIFO Method  LIFO Method  Average cost Method