Question

 

  
Laker Company reported the following January purchases and sales data for its only product.
  

Date		Activities	Units Acquired at Cost								Units sold at Retail
Jan.	1	Beginning inventory	225	units	@	$	15.00	=	$	3,375
Jan.	10	Sales										175	units	@	$	24.00
Jan.	20	Purchase	180	units	@	$	14.00	=		2,520
Jan.	25	Sales										210	units	@	$	24.00
Jan.	30	Purchase	385	units	@	$	13.00	=		5,005
		Totals	790	units					$	10,900		385	units

Required:
The Company uses a periodic inventory system. For specific identification, ending inventory consists of 405 units, where 385 are from the January 30 purchase, 5 are from the January 20 purchase, and 15 are from beginning inventory. Determine the cost assigned to ending inventory and to cost of goods sold using (a) specific identification, (b) weighted average, (c) FIFO, and (d) LIFO.
  

Determine the cost assigned to ending inventory and to cost of goods sold using specific identification. For specific identification, ending inventory consists of 405 units, where 385 are from the January 30 purchase, 5 are from the January 20 purchase, and 15 are from beginning inventory.

a) Specific Identification Cost of Goods Available for Sale Cost of Goods Sold Ending Inventory   # of units Cost per unit Cost of Goods Available for Sale # of units sold Cost per unit Cost of Goods Sold # of units in ending inventory Cost per unit Ending Inventory Beginning inventory                   Purchases:                   Jan. 20                   Jan. 30                   Total 0   $0 0   $0 0   $0

Determine the cost assigned to ending inventory and to cost of goods sold using weighted average. (Round cost per unit to 2 decimal places.)

b) Average Cost Cost of Goods Available for Sale Cost of Goods Sold Ending Inventory   # of units Average Cost per unit Cost of Goods Available for Sale # of units sold Average Cost per Unit Cost of Goods Sold # of units in ending inventory Average Cost per unit Ending Inventory Beginning inventory                   Purchases:               Jan. 20                   Jan. 30                   Total 0   $0     $0     $0

LIFO AND FIFO TOO!!!!

Answer 1

Solution 1:

Sold units = No. of units available on particular date - Ending inventory units on the same date.
	Purchase date	Units available (a)	Ending inventory (b)		Units sold (a - b)
	1-Jan	225	15		210
	20-Jan	180	5		175
	30-Jan	385	385		0

Computation of COGS and ending inventory - Specific identification
Particulars	Cost of goods available for sale			Cost of goods sold			Ending Inventory
	Nos of units	Unit Cost	Cost of goods available for sale	Nos of units sold	Unit Cost	Cost of goods sold	Nos of units in ending inventory	Unit Cost	Ending inventory
Beginning inventory	225	$15.00	$3,375	210	$15.00	$3,150.00	15	$15.00	$225.00
Purchases:
20-Jan	180	$14.00	$2,520	175	$14.00	$2,450.00	5	$14.00	$70.00
30-Jan	385	$13.00	$5,005	0	$13.00	$0.00	385	$13.00	$5,005.00
Total	790		$10,900	385		$5,600.00	405		$5,300.00

Average Cost		Cost of Goods available for sale				Cost of Goods sold				Ending Inventory
Particulars		Units	Rate	Amount		Units	Rate	Amount		Units	Rate	Amount
Beginning inventory		225	$    15.00	$ 3,375.00		225	$    13.80	$ 3,104.00
Purchases:
20-Jan		180	$    14.00	$ 2,520.00		160	$    13.80	$ 2,208.00
30-Jan		385	$    13.00	$ 5,005.00						405	$    13.80	$ 5,588.00
Total		790		$ 10,900.00		385		$ 5,312.00		405		$ 5,588.00
FIFO		Cost of Goods available for sale				Cost of Goods sold				Ending Inventory
Particulars		Units	Rate	Amount		Units	Rate	Amount		Units	Rate	Amount
Beginning inventory		225	$    15.00	$ 3,375.00		225	$    15.00	$ 3,375.00			$    15.00
Purchases:
20-Jan		180	$    14.00	$ 2,520.00		160	$    14.00	$ 2,240.00		20	$    14.00	$ 280.00
30-Jan		385	$    13.00	$ 5,005.00						385	$    13.00	$ 5,005.00
Total		790		$ 10,900.00		385		$ 5,615.00		405		$ 5,285.00
LIFO		Cost of Goods available for sale				Cost of Goods sold				Ending Inventory
Particulars		Units	Rate	Amount		Units	Rate	Amount		Units	Rate	Amount
Beginning inventory		225	$    15.00	$ 3,375.00						225	$    15.00	$ 3,375.00
Purchases:
20-Jan		180	$    14.00	$ 2,520.00						180	$    14.00	$ 2,520.00
30-Jan		385	$    13.00	$ 5,005.00		385	$    13.00	$ 5,005.00
Total		790		$ 10,900.00		385		$ 5,005.00		405		$ 5,895.00