Question

Problem 6-7AA Periodic: Alternative cost flows LO P3

Seminole Company began year 2017 with 23,000 units of product in its January 1 inventory costing $15.60 each. It made successive purchases of its product in year 2017 as follows. The company uses a periodic inventory system. On December 31, 2017, a physical count reveals that 41,000 units of its product remain in inventory.
  

Mar.	7	34,000 units @ $18.60 each
May	25	36,000 units @ $22.60 each
Aug.	1	26,000 units @ $24.60 each
Nov.	10	36,000 units @ $27.60 each

Required:
1. Compute the number and total cost of the units available for sale in year 2017.
2. Compute the amounts assigned to the 2017 ending inventory and the cost of goods sold using (a) FIFO, (b) LIFO, and (c) weighted average.

Problem 6-7AA Periodic: Alternative cost flows LO P3

Seminole Company began year 2017 with 23,000 units of product in its January 1 inventory costing $15.60 each. It made successive purchases of its product in year 2017 as follows. The company uses a periodic inventory system. On December 31, 2017, a physical count reveals that 41,000 units of its product remain in inventory.
  

Mar.	7	34,000 units @ $18.60 each
May	25	36,000 units @ $22.60 each
Aug.	1	26,000 units @ $24.60 each
Nov.	10	36,000 units @ $27.60 each

Required:
1. Compute the number and total cost of the units available for sale in year 2017.
2. Compute the amounts assigned to the 2017 ending inventory and the cost of goods sold using (a) FIFO, (b) LIFO, and (c) weighted average.

Answer 1

Solution 1:

Cost of Goods available for Sale
Particulars	Units	Cost per unit	Total
Beginning Inventory	23000	$15.60	$358,800.00
Purchases:
7-Mar	34000	$18.60	$632,400.00
25-May	36000	$22.60	$813,600.00
1-Aug	26000	$24.60	$639,600.00
10-Nov	36000	$27.60	$993,600.00
Total Purchases	132000		$3,079,200.00
Cost of Goods available for Sale	155000		$3,438,000.00

Solution 2a:

FIFO (Periodic)
Particulars	Units	Cost per unit	Total
Beginning Inventory	23000	$15.60	$358,800.00
Purchases:
7-Mar	34000	$18.60	$632,400.00
25-May	36000	$22.60	$813,600.00
1-Aug	26000	$24.60	$639,600.00
10-Nov	36000	$27.60	$993,600.00
Total Purchases	132000		$3,079,200.00
Cost of Goods available for Sale	155000		$3,438,000.00
Cost of goods sold:
Units from beginning inventory	23000	$15.60	$358,800.00
Units from Mar 7 purchase	34000	$18.60	$632,400.00
Units from May 25 purchase	36000	$22.60	$813,600.00
Units from Aug 1 purchase	21000	$24.60	$516,600.00
Units from Nov 10 purchase	0	$27.60	$0.00
Total cost of goods sold	114000		$2,321,400.00
Ending Inventory	41000		$1,116,600.00

Solution 2b:

LIFO (Periodic)
Particulars	Units	Cost per unit	Total
Beginning Inventory	23000	$15.60	$358,800.00
Purchases:
7-Mar	34000	$18.60	$632,400.00
25-May	36000	$22.60	$813,600.00
1-Aug	26000	$24.60	$639,600.00
10-Nov	36000	$27.60	$993,600.00
Total Purchases	132000		$3,079,200.00
Cost of Goods available for Sale	155000		$3,438,000.00
Cost of goods sold:
Units from beginning inventory	0	$15.60	$0.00
Units from Mar 7 purchase	16000	$18.60	$297,600.00
Units from May 25 purchase	36000	$22.60	$813,600.00
Units from Aug 1 purchase	26000	$24.60	$639,600.00
Units from Nov 10 purchase	36000	$27.60	$993,600.00
Total cost of goods sold	114000		$2,744,400.00
Ending Inventory	41000		$693,600.00

Solution 2c:

Weighted Average (Periodic)
Particulars	Units	Cost per unit	Total
Beginning Inventory	23000	$15.60	$358,800.00
Purchases:
7-Mar	34000	$18.60	$632,400.00
25-May	36000	$22.60	$813,600.00
1-Aug	26000	$24.60	$639,600.00
10-Nov	36000	$27.60	$993,600.00
Total Purchases	132000		$3,079,200.00
Cost of Goods available for Sale	155000	$22.181	$3,438,000.00
Cost of goods sold	114000	$22.181	$2,528,594
Ending Inventory	41000		$909,406