Question
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Computing Cost of Goods Sold and Ending Inventory. Bartov Corporation reports the following beginning inventory and...
Computing Cost of Goods Sold and Ending Inventory.
Bartov Corporation reports the following beginning inventory and purchases for 2017
| Beginning Inventory | 300 | @ | $8 | each | $2,400 |
| Inventory Purchased | 700 | @ | $10 | each | 7,000 |
| Cost of goods available | 1,000 | units | $9,400 |
Bartov sells 600 of these units in 2017. Compute its cost of goods sold for 2017 and the ending inventory reported on its 2017 balance sheet under each of the following inventory costing methods. (Do not round until final answer. Round to the nearest whole number.)
| FIFO | LIFO | AVERAGE COST | |
| Cost of goods sold | $ | $ | $ |
| Ending inventory | 0 | 0 | 0 |
Solutions
Expert Solution
FIFO =
| Particular | Calculation | Amount |
| Beginning Inventory | 300 units x $ 8 = | $2,400 |
| Add: Purchase | 700 units x $ 10= | $ 7,000 |
| Issue 600 units |
300 units x $8= $ 2,400 300 units x $ 10 = $ 3,000 |
|
|
less:Closing Inventory |
(700-300) units x $10= | $4,000 |
| COGS | ($2400+$7,000 - $ 4000)= | $5,400 |
LIFO (LAST IN FIRST OUT)
| Particulars | calculations | Amount |
| Opening balance | 300 units x $ 8= | $2,400 |
| Add: Purchase | 700 units x $ 10= | $7,000 |
|
Issue 600 units |
600 units x $ 10 = $6000 | |
| Closing Inventory |
100 units x $10 = $1,000 300 units x $ 8= $ 2,400 |
$3,400 |
| COGS | ($2,400+$7000-$3,400)= | $6,000 |
AVERAGE COST
| Particular | Calculation | Amount |
| Beginning Inventory | 300 units x $ 8= | $2,400 |
| Add: Purchase | 700 units x $ 10 = | $7,000 |
| Cost of good Available | 1,000 units | $9,400 |
| Average Cost | $9,400/ 1000 = $ 9.4 | |
| Sales 600 units | 600 units x $ 9.4 =$ 5,640 | |
| Closing Inventory | (1,000 - 600) units x $ 9.4= | $ 3,760 |
| COGS | ($2,400 + $ 7,000 - $ 3,760)= | $5,640 |
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