In: Accounting
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 |
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 | |||||||