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Skiller Company has the following information regarding its inventory for the second year of operations. Transactions...

Skiller Company has the following information regarding its inventory for the second year of operations.

Transactions Units Sales in units Unit Cost
Beginning Inventory, January 1 35,000 $3.50
Purchases
February 8 45,500 3.60
March 15 100,250 3.80
April 10 62,000 4.10
Units sold- April 22 at $12 155,000
Purchases
May 9 81,000 4.35
June 19 28,000 4.56
Units sold- August 11 at $14 115,000
Purchases
September 30 15,000 4.75
October 30 41,000 4.85
November 17 8,000 4.90
Units sold-December 21 at $16 21,500

A. Compute the ending inventory and cost of goods sold under each of the following cost-flow assumptions assuming a perpetual inventory system. (Round your answers to two decimal places.)

Cost-flow assumption Ending Inventory Cost of Goods Sold Gross Profit
FIFO
LIFO
Moving Average

B. Compute the ending inventory and cost of goods sold under each of the following cost-flow assumptions assuming a periodic inventory system. (Round your answers to two decimal places).

Cost-flow assumption Ending Inventory Cost of Goods Sold Gross Profit
FIFO
LIFO
Weighted Average

Solutions

Expert Solution

Ans. Calculation of Total Sales:
Date Units Rate Total
22-Apr 155000 12 1860000
11-Aug 115000 14 1610000
21-Dec 21500 16 344000
Total sales 291500 3814000
Ans.A 1 Perpetual FIFO:
Purchase Cost of goods sold Balance
Date Quantity Rate Total cost Quantity Rate Total cost Quantity Rate Total cost
1-Jan 35000 3.5 122500
8-Feb 45500 3.6 163800 35000 3.5 122500
45500 3.6 163800
15-Mar 100250 3.8 380950 35000 3.5 122500
45500 3.6 163800
100250 3.8 380950
10-Apr 62000 4.1 254200 35000 3.5 122500
45500 3.6 163800
100250 3.8 380950
62000 4.1 254200
22-Apr 35000 3.5 122500
45500 3.6 163800
74500 3.8 283100 25750 3.8 97850
62000 4.1 254200
9-May 81000 4.35 352350 25750 3.8 97850
62000 4.1 254200
81000 4.35 352350
19-Jun 28000 4.56 127680 25750 3.8 97850
62000 4.1 254200
81000 4.35 352350
28000 4.56 127680
11-Aug 25750 3.8 97850
62000 4.1 254200
27250 4.35 118537.5 53750 4.35 233812.5
28000 4.56 127680
30-Sep 15000 4.75 71250 53750 4.35 233812.5
28000 4.56 127680
15000 4.75 71250
30-Oct 41000 4.85 198850 53750 4.35 233812.5
28000 4.56 127680
15000 4.75 71250
41000 4.85 198850
17-Nov 8000 4.9 39200 53750 4.35 233812.5
28000 4.56 127680
15000 4.75 71250
41000 4.85 198850
8000 4.9 39200
21-Dec
21500 4.35 93525 32250 4.35 140287.5
28000 4.56 127680
15000 4.75 71250
41000 4.85 198850
8000 4.9 39200
Total Cost of goods sold 1133512.5 Ending inventory 577267.5
Ans.2 PERPETUAL LIFO:
Purchase Cost of goods sold Balance
Date Quantity Rate Total cost Quantity Rate Total cost Quantity Rate Total cost
1-Jan 35000 3.5 122500
8-Feb 45500 3.6 163800 35000 3.5 122500
45500 3.6 163800
15-Mar 100250 3.8 380950 35000 3.5 122500
45500 3.6 163800
100250 3.8 380950
10-Apr 62000 4.1 254200 35000 3.5 122500
45500 3.6 163800
100250 3.8 380950
62000 4.1 254200
22-Apr 62000 4.1 254200
93000 3.8 353400 35000 3.5 122500
45500 3.6 163800
7250 3.8 27550
9-May 81000 4.35 352350 35000 3.5 122500
45500 3.6 163800
7250 3.8 27550
81000 4.35 352350
19-Jun 28000 4.56 127680 35000 3.5 122500
45500 3.6 163800
7250 3.8 27550
81000 4.35 352350
28000 4.56 127680
11-Aug 28000 4.56 127680
81000 4.35 352350
6000 3.8 22800 35000 3.5 122500
45500 3.6 163800
1250 3.8 4750
30-Sep 15000 4.75 71250 35000 3.5 122500
45500 3.6 163800
1250 3.8 4750
15000 4.75 71250
30-Oct 41000 4.85 198850 35000 3.5 122500
45500 3.6 163800
1250 3.8 4750
15000 4.75 71250
41000 4.85 198850
17-Nov 8000 4.9 39200 35000 3.5 122500
45500 3.6 163800
1250 3.8 4750
15000 4.75 71250
41000 4.85 198850
8000 4.9 39200
21-Dec 8000 4.9 39200
13500 4.85 65475 35000 3.5 122500
45500 3.6 163800
1250 3.8 4750
15000 4.75 71250
27500 4.85 133375
Total Cost of goods sold 1215105 Ending inventory 495675
Ans.A 3 Weighted Average method:
Purchase Cost of goods sold Balance
Date Quantity Rate Total cost Quantity Rate Total cost Quantity Rate Total cost
1-Jan 35000 3.5 122500
8-Feb 45500 3.6 163800 80500 3.56 286300
15-Mar 100250 3.8 380950 180750 3.69 667250
10-Apr 62000 4.1 254200 242750 3.80 921450
22-Apr 155000 3.8 589000 87750 3.79 332450
9-May 81000 4.35 352350 168750 4.06 684800
19-Jun 28000 4.56 127680 196750 4.13 812480
11-Aug 115000 4.13 474950 81750 4.13 337530
30-Sep 15000 4.75 71250 96750 4.23 408780
30-Oct 41000 4.85 198850 137750 4.41 607630
17-Nov 8000 4.9 39200 145750 4.44 646830
21-Dec 21500 4.44 95460 124250 4.44 551370
Total Cost of goods sold 1159410 Ending inventory 551370
FIFO LIFO Moving Avg.
Sales 3814000 3814000 3814000
less: Cost of goods sold 1133512.5 1215105 1159410
Gross profit 2680487.5 2598895 2654590
Ans.B Available for Sales:
Date Units Rate Total
1-Jan 35000 3.5 122500
8-Feb 45500 3.6 163800
15-Mar 100250 3.8 380950
10-Apr 62000 4.1 254200
9-May 81000 4.35 352350
19-Jun 28000 4.56 127680
30-Sep 15000 4.75 71250
30-Oct 41000 4.85 198850
17-Nov 8000 4.9 39200
Total 415750 1710780
Ans.B 1 No. of units sold = (155000+115000+21500) = 291500
FIFO:    (Cost of Goods Sold)
Date Units Rate Total
1-Jan 35000 3.5 122500
8-Feb 45500 3.6 163800
15-Mar 100250 3.8 380950
10-Apr 62000 4.1 254200
9-May 48750 4.35 212062.5
Total 291500 1133512.5
Cost of ending inventory = Total cost of goods available for sale - Cost of goods sold
1710780 - 1133512.5
577267.5
Ans.B 2 LIFO:    (Cost of Goods Sold)
Date Units Rate Total
17-Nov 8000 4.9 39200
30-Oct 41000 4.85 198850
30-Sep 15000 4.75 71250
19-Jun 28000 4.56 127680
9-May 81000 4.35 352350
10-Apr 62000 4.1 254200
15-Mar 56500 3.8 214700
Total 291500 1258230
Cost of ending inventory = Total cost of goods available for sale - Cost of goods sold
1710780 - 1258230
452550
Ans.B 3
Weighted average cost per unit = Total cost of goods available for sale / Total units available
1710780 / 415750
4.11
Cost of goods sold = No. of units sold * Average cost per unit
291500 * 4.11
1198065
Cost of ending inventory = Total cost of goods available for sale - Cost of goods sold
1710780 - 1198065
512715
FIFO LIFO Moving Avg.
Sales 3814000 3814000 3814000
less: Cost of goods sold 1133512.5 1258230 1198065
Gross profit 2680487.5 2555770 2615935

ekkarill92 answered 3 years ago
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