Question

Speed World Cycles sells high-performance motorcycles and motocross racers. One of Speed World’s most popular models is the Kazomma 900 dirt bike. During the current year, Speed World Cycles purchased eight of these bikes at the following costs.

Purchase Date	Units Purchased		Unit Cost				Total Cost
July 1	2		$	4,950			$	9,900
July 22	3			5,000				15,000
Aug. 3	3			5,100				15,300
	8						$	40,200

On July 28, Speed World Cycles sold four Kazomma 900 dirt bikes to the Vince Wilson racing team. The remaining four bikes remained in inventory at September 30, the end of Speed World’s fiscal year.

Assume that Speed World Cycles uses a periodic inventory system.

Required:

a. Compute the cost of goods sold relating to the sale on July 28 and the ending inventory of Kazomma 900 dirt bikes at September 30, using the following cost flow assumptions.

1. Average cost.

2. FIFO.

3. LIFO.

Answer 1

STATEMENT SHOWING INVENTORY RECORD UNDER PERIODIC FIFO METHOD
	RECIEPTS	COST OF GOODS SOLD	BALANCE
DATE	UNITS	RATE	AMOUNT $	UNITS	RATE	AMOUNT $	UNITS	RATE	AMOUNT $
Purchase
01-Jul	2	4950	9900	2	4950	9900
22-Jul	3	5000	15000	2	5000	10000	1	5000	5000
03-Aug	3	5100	15300				3	5100	15300
TOTAL	8		40200	4		19900	4		20300
STATEMENT SHOWING INVENTORY RECORD UNDER PERIODIC LIFO METHOD
	RECIEPTS	COST OF GOODS SOLD	BALANCE
DATE	UNITS	RATE	AMOUNT $	UNITS	RATE	AMOUNT $	UNITS	RATE	AMOUNT $
Purchase
01-Jul	2	4950	9900				2	4950	9900
22-Jul	3	5000	15000	1	5000	5000	2	5000	10000
03-Aug	3	5100	15300	3	5100	15300
TOTAL	8		40200	4		20300	4		19900
STATEMENT SHOWING INVENTORY RECORD UNDER PERIODIC WEIGHTED AVERAGE METHOD
	RECIEPTS	COST OF GOODS SOLD	BALANCE
DATE	UNITS	RATE	AMOUNT $	UNITS	RATE	AMOUNT $	UNITS	RATE	AMOUNT $
Purchase
01-Jul	2	4950	9900
22-Jul	3	5000	15000
03-Aug	3	5100	15300
TOTAL	8	5025	40200	4	5025	20100	4	5025	20100
			COGS	Ending Inventory
	Average	20100	20100
	FIFO		19900	20300
	LIFO		20300	19900