Question

In: Accounting

n its first month of operations, Literacy for the Illiterate opened a new bookstore and bought...

n its first month of operations, Literacy for the Illiterate opened a new bookstore and bought merchandise in the following order: (1) 150 units at $8 on January 1, (2) 530 units at $9 on January 8, and (3) 830 units at $11 on January 29.


Assume 1,020 units are on hand at the end of the month, calculate the cost of goods available for sale, ending inventory, and cost of goods sold under the (a) FIFO, (b) LIFO, and (c) weighted average cost flow assumptions. Assume a periodic inventory system is used. (Round "Cost per Unit" to 2 decimal places.)

Solutions

Expert Solution

a) FIFO

cost of goods available for sale = 150 units at $8 on January 1 = $1200

= 530 units at $9 on January 8 = $4770

= 830 units at $11 on January 29 = $9130

1510 = $15100

Cost of goods sold = 150 units at $8 on January 1 = $1200

= 340 units at $9 on January 8 = $3060

490 = $4260

Ending inventory = 190 units at $9 on January 8 = 1710

= 830 units at $11 on January 29 = $9130

1020 = $10840

Note:- Units sold = total purchased - ending inventory

= 1510 - 1020

= 490 units

(b) LIFO

cost of goods available for sale = 150 units at $8 on January 1 = $1200

= 530 units at $9 on January 8 = $4770

= 830 units at $11 on January 29 = $9130

= $15100

Cost of goods sold = 490 units at $11 on January 29 = $5390

Ending inventory = 150 units at $8 on January 1 = $1200

= 530 units at $9 on January 8 = $4770

= 340 units at $11 on January 29 = $3740

1020 = $9710

(c) weighted average cost flow

   Aveage cost = Total cost available for sale / total units

= $15100 / $1510

= $10

Cost of goods sold = 490 units at $10 = $4900

Ending inventory = 1020 * $10 = $10200

ekkarill92 answered 2 years ago
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