Question

Bridgeport Distribution markets CDs of the performing artist Fishe. At the beginning of October, Bridgeport had in beginning inventory 2,400 of Fishe’s CDs with a unit cost of $6. During October, Bridgeport made the following purchases of Fishe’s CDs. Oct. 3 3,000 @ $7 Oct. 19 3,600 @ $9 Oct. 9 4,200 @ $8 Oct. 25 4,800 @ $10 During October, 13,080 units were sold. Bridgeport uses a periodic inventory system.

Determine the cost of goods available for sale. Cost of goods available for sale $enter the Cost of goods available for sale in dollars

Calculate weighted-average cost per unit. (Round answer to 2 decimal places, e.g. 2.25.) Weighted-average cost per unit $enter cost per unit in dollars rounded to 2 decimal places

Determine (1) the ending inventory and (2) the cost of goods sold under each of the assumed cost flow methods (FIFO, LIFO, and average-cost). Prove the accuracy of the cost of goods sold under the FIFO and LIFO methods. (Round answers to 0 decimal places, e.g. 1,250. Use weighted-average unit cost rounded to 2 decimal places for computations.) FIFO LIFO AVERAGE-COST The ending inventory $enter a dollar amount rounded to 0 decimal places $enter a dollar amount rounded to 0 decimal places $enter a dollar amount rounded to 0 decimal places The cost of goods sold $enter a dollar amount rounded to 0 decimal places $enter a dollar amount rounded to 0 decimal places $enter a dollar amount rounded to 0 decimal places

Which cost flow method results in (1) the highest inventory amount for the balance sheet and (2) the highest cost of goods sold for the income statement? (1) select a method FIFOLIFOAverage-cost produces the highest inventory amount, $enter a dollar amount . (2) select a method FIFOLIFOAverage-cost produces the highest cost of goods sold, $enter a dollar amount . Click if you would like to Show Work for this question: Open Show Work

Answer 1

• Working

Average Method	Cost of Goods available for sale
	Units	Cost/unit	COG for sale
Beginning Inventory	2400	$                   6.00	$                      14,400.00
Purchases:
03-Oct	3000	$                   7.00	$                      21,000.00
09-Oct	4200	$                   8.00	$                      33,600.00
19-Oct	3600	$                   9.00	$                      32,400.00
25-Oct	4800	$                10.00	$                      48,000.00
TOTAL	18000	$              8.3000	$                    149,400.00

Cost of Goods available for sale = $ 149400

Weighted Average Cost per unit = $ 149400 / 18000 = $ 8.30

• Other requirements

	FIFO	LIFO	Weighted Average
Ending Inventory	$    49,080.00	$            32,040.00	$               40,836.00 [4920 x $ 8.30]
Cost of Goods Sold	$ 100,320.00	$          117,360.00	$             108,564.00 [13080 x $ 8.30]

• Highest Inventory = FIFO = $ 49080
• Highest Cost of Goods Sold = LIFO = $ 117360

FIFO	Cost of Goods available for sale			Cost of Goods Sold			Ending Inventory
	Units	Cost/unit	COG for sale	Units sold	Cost/unit	COGS	Units	Cost/unit	Ending inventory
Beginning Inventory	2400	$                   6.00	$                      14,400.00	2400	$                 6.00	$               14,400.00	0	$                   6.00	$                         -
Purchases:
03-Oct	3000	$                   7.00	$                      21,000.00	3000	$                 7.00	$               21,000.00	0	$                   7.00	$                         -
09-Oct	4200	$                   8.00	$                      33,600.00	4200	$                 8.00	$               33,600.00	0	$                   8.00	$                         -
19-Oct	3600	$                   9.00	$                      32,400.00	3480	$                 9.00	$               31,320.00	120	$                   9.00	$            1,080.00
25-Oct	4800	$                10.00	$                      48,000.00	0	$               10.00	$                              -	4800	$                 10.00	$          48,000.00
TOTAL	18000		$                    149,400.00	13080		$            100,320.00	4920		$          49,080.00
LIFO	Cost of Goods available for sale			Cost of Goods Sold			Ending Inventory
	Units	Cost/unit	COG for sale	Units sold	Cost/unit	COGS	Units	Cost/unit	Ending inventory
Beginning Inventory	2400	$                   6.00	$                      14,400.00	0	$                 6.00	$                              -	2400	$                   6.00	$          14,400.00
Purchases:
03-Oct	3000	$                   7.00	$                      21,000.00	480	$                 7.00	$                 3,360.00	2520	$                   7.00	$          17,640.00
09-Oct	4200	$                   8.00	$                      33,600.00	4200	$                 8.00	$               33,600.00	0	$                   8.00	$                         -
19-Oct	3600	$                   9.00	$                      32,400.00	3600	$                 9.00	$               32,400.00	0	$                   9.00	$                         -
25-Oct	4800	$                10.00	$                      48,000.00	4800	$               10.00	$               48,000.00	0	$                10.00	$                         -
TOTAL	18000		$                    149,400.00	13080		$            117,360.00	4920		$          32,040.00