Question

Problem 6-63A
Inventory Costing Methods

Anderson's Department Store has the following data for inventory, purchases, and sales of merchandise for December for one of the items the company sells:

Activity	Units		Purchase Price (per unit)		Sale Price (per unit)
Beginning inventory	10		$6.00
Purchase 1, Dec. 2	22		6.80
Purchase 2, Dec. 5	26		7.50
Sale 1, Dec. 7	19				$12.00
Sale 2, Dec. 10	25				12.00
Purchase 3, Dec. 12	12		8.00
Sale 3, Dec. 14	20				12.00

Anderson's uses a perpetual inventory system. All purchases and sales were for cash.

Required:

1. Compute cost of goods sold and the cost of ending inventory using FIFO. If required, round your answers to the nearest cent.

Cost of goods sold	$
Cost of ending inventory	$

2. Compute cost of goods sold and the cost of ending inventory using the weighted average cost method. (Note: Use four decimal places for per-unit calculations and round all other numbers to the nearest penny.)

Cost of goods sold	$
Cost of ending inventory	$

Feedback

Incorrect

3. Prepare the journal entries to record these transactions, assuming Anderson's chooses to use the FIFO method. If required, round your answers to the nearest cent.

Dec. 2	Inventory
	Cash
	(Purchased inventory)
Dec. 5	Inventory
	Cash
	(Purchased inventory)
Dec. 7
	(Recorded cash sales to customers)
Dec. 7
	(Recorded cost of goods sold)
Dec. 10
	(Recorded cash sales to customers)
Dec. 10
	(Recorded cost of goods sold)
Dec. 12
	(Purchased inventory)
Dec. 14
	(Recorded cash sales to customers)
Dec. 14
	(Recorded cost of goods sold)

Answer 1

1. Compute cost of goods sold and the cost of ending inventory using FIFO. If required, round your answers to the nearest cent.

Cost of goods sold = (10*6+22*6.80+26*7.5+6*8) = $452.60

Cost of ending inventory = 6*8 = $48

2. Compute cost of goods sold and the cost of ending inventory using the weighted average cost method.

Cost of goods sold = (19*6.9759+25+6.7959+20*7.4485) = $455.91

Cost of ending inventory = 6*7.4485 = 44.69

3. Prepare the journal entries to record these transactions, assuming Anderson's chooses to use the FIFO method

Date	account and explanation	debit	credit
Dec 2	Inventory	149.60
	Cash		149.60
	(To record purchase)
Dec 5	Inventory	195
	Cash		195
	(To record purchase)
Dec 7	Cash (19*12)	228
	Sales revenue		228
	(To record sales)
Dec 7	Cost of goods sold (10*6+9*6.80)	121.20
	Inventory		121.20
	(To record cost of goods sold)
Dec 10	Cash (25*12)	300
	Sales revenue		300
	(To record sales)
Dec 10	Cost of goods sold (13*6.8+12*7.5)	178.40
	Inventory		178.40
	(TO record cost of goods sold)
Dec 12	Inventory	96
	Cash		96
	(To record purchase inventory)
Dec 14	Cash (20*12)	240
	Sales revenue		240
	(To record cost)
Dec 14	Cost of goods sold (14*7.5+6*8)	153
	Inventory		153
	(To record cost of goods sold)