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				Unit Cost				Total Cost
October	1		Beginning inventory		6			$	710				$	4,260
October	4		Sale		4
October	10		Purchase		5				720					3,600
October	13		Sale		3
October	20		Purchase		4				730					2,920
October	28		Sale		7
October	30		Purchase		7				740					5,180
													$	15,960

Required:

1. Calculate ending inventory and cost of goods sold at October 31, using the specific identification method. The October 4 sale consists of purses from beginning inventory, the October 13 sale consists of one purse from beginning inventory and two purses from the October 10 purchase, and the October 28 sale consists of three purses from the October 10 purchase and four purses from the October 20 purchase.

2. Using FIFO, calculate ending inventory and cost of goods sold at October 31.

3. Using LIFO, calculate ending inventory and cost of goods sold at October 31.

4. Using weighted-average cost, calculate ending inventory and cost of goods sold at October 31. (Round your intermediate and final answers to 2 decimal places.)

Answer 1

1) calculation of ending inventory and cost of goods sold at october 31, using the specific identification method :

date

purchase

cost of goods sold

ending inventory

date	no. of units purchased	unit cost in $	no. of units sold	unit cost in $	cost of goods sold in $	no. of units	unit cost in $	ending inventory in $
1 october						6	710	4260
4 october			4	710	2840	2	710	1420
10 october	5	720				2	710	1420
						5	720	3600
13 october			1	710	710	1	710	710
			2	720	1440	3	720	2160
20 october	4	730				1	710	710
						3	720	2160
						4	730	2920
28 october			3	720	2160	1	710	710
			4	730	2920
30 october	7	740				1	710	710
						7	740	5180
total			14		10070	8		5890

ending inventory at october 31, = 8 unit having value $5890.

cost of goods sold at october 31, = 14 units having value $10070

2) calculation of ending inventory and cost of goods sold at october 31, using FIFO method :

date

purchase

cost of goods sold

ending inventory

date	no. of units purchased	unit cost in $	no. of units sold	unit cost in $	cost of goods sold in $	no. of units	unit cost in $	ending inventory in $
1 october						6	710	4260
4 october			4	710	2840	2	710	1420
10 october	5	720				2	710	1420
						5	720	3600
13 october			2	710	1420	4	720	2880
			1	720	720
20 october	4	730				4	720	2880
						4	730	2920
28 october			4	720	2880	1	730	730
			3	730	2190
30 october	7	740				1	730	730
						7	740	5180
total			14		10050	8		5910

ending inventory at october 31, = 8 unit having value $5910.

cost of goods sold at october 31, = 14 units having value $10050

3) calculation of ending inventory and cost of goods sold at october 31, using LIFO method :

date

purchase

cost of goods sold

ending inventory

date	no. of units purchased	unit cost in $	no. of units sold	unit cost in $	cost of goods sold in $	no. of units	unit cost in $	ending inventory in $
1 october						6	710	4260
4 october			4	710	2840	2	710	1420
10 october	5	720				2	710	1420
						5	720	3600
13 october			3	720	2160	2	710	1420
						2	720	1440
20 october	4	730				2	710	1420
						2	720	1440
						4	730	2920
28 october			4	730	2920	1	710	710
			2	720	1440
			1	710	710
30 october	7	740				1	710	710
						7	740	5180
total			14		10070	8		5890

ending inventory at october 31, = 8 unit having value $5890.

cost of goods sold at october 31, = 14 units having value $10070

4) calculation of ending inventory and cost of goods sold at october 31, using weighted-average cost method :

date

purchase

cost of goods sold

ending inventory

date	no. of units purchased	unit cost in $	no. of units sold	unit cost in $	cost of goods sold in $	no. of units	unit cost in $	ending inventory in $
1 october						6	710	4260
4 october			4	710	2840	2	710	1420
10 october	5	720				2	710	1420
						5	720	3600
weighted-average						7	717.14 = (710x2 + 720x5) / (2+5)	5020
13 october			3	717.14	2151.42	4	717.14	2868.58
20 october	4	730				4	717.14	2868.58
						4	730	2920
weighted-average						8	723.5725 = 5788.58 / 8	5788.58
28 october			7	723.5725	5065.0075	1	723.5725	723.5725
30 october	7	740				1	723.5725	723.5725
						7	740	5180
total			14		10056.4275	8		5903.5725

ending inventory at october 31, = 8 unit having value $5903.5725 or $5904 (round off in $)

cost of goods sold at october 31, = 14 units having value $10056.4275 or $10056 (round off in $)

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