Question

Sandra's Purse Boutique has the following transactions related to its top-selling Gucci purse for the month of October. Sandra's Purse Boutique uses a periodic inventory system.

Date	Transactions	Units	Cost per Unit	Total Cost
October 1	Beginning inventory	6	$770	$ 4,620
October 4	Sale	4
October 10	Purchase	5	780	3,900
October 13	Sale	3
October 20	Purchase	4	790	3,160
October 28	Sale	7
October 30	Purchase	7	800	5,600
				$17,280

a) Using FIFO, calculate cost of goods sold on October 31.

b) Using FIFO, calculate ending inventory on October 31.

c) Using LIFO, calculate cost of goods sold on October 31.

d) Using LIFO, calculate ending inventory on October 31

e) Calculate weighted-average cost per unit. (Round your answer to 2 decimal places.)

Answer 1

a)

FIFO Method

Cost of goods sold

	Units	Rate	Amount
Sale from beginning inventory	6	$ 770	$    4,620
Sale from October 10th purchase	5	$ 780	$    3,900
Sale from October 20th purchase	3	$ 790	$    2,370
Cost of goods sold	14		$ 10,890

b)

FIFO Method

Ending inventory

	Units	Rate	Amount
Balance from October 20th purchase	1	$ 790	$      790
Balance from October 30th purchase	7	$ 800	$ 5,600
Ending inventory	8		$ 6,390

c)

LIFO Method

Cost of goods sold

	Units	Rate	Amount
Sale from October 30th purchase	7	$ 800	$    5,600
Sale from October 20th purchase	4	$ 790	$    3,160
Sale from October 10th purchase	3	$ 780	$    2,340
Cost of goods sold	14		$ 11,100

d)

LIFO Method

Ending inventory

	Units	Rate	Amount
Balance from October 10th purchase	2	$ 780	$ 1,560
Balance from Beginning inventory	6	$ 770	$ 4,620
Ending inventory	8		$ 6,180

e)

	Units	rate	Amount
Beginning inventory	6	$ 770	$    4,620
October 10	5	$ 780	$    3,900
October 20	4	$ 790	$    3,160
October 30	7	$ 800	$    5,600
Goods available for sale	22		$ 17,280

Weighted average cost per unit = value of goods available for sale / Total units available

Weighted average cost per unit = $17,280 / 22

Weighted average cost per unit = $785.45

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