Question

Cortez Company sells chairs that are used at computer stations. Its beginning inventory of chairs was 70 units at $30 per unit. During the year, Cortez made two batch purchases of this chair. The first was a 162-unit purchase at $34 per unit; the second was a 200-unit purchase at $36 per unit. During the period, it sold 276 chairs.

Determine the amount of product costs that would be allocated to cost of goods sold and ending inventory, assuming that Cortez uses A. FIFO B. LIFO

C. WEIGHTED AVERAGE

Answer 1

• All working forms part of the answer

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	70	$                30.00	$                        2,100.00	70	$         30.00	$           2,100.00	0	$        30.00	$                         -
Purchases:
05-Jun	162	$                34.00	$                        5,508.00	162	$         34.00	$           5,508.00	0	$        34.00	$                         -
23-Jun	200	$                36.00	$                        7,200.00	44	$         36.00	$           1,584.00	156	$        36.00	$            5,616.00
TOTAL	432		$                      14,808.00	276		$           9,192.00	156		$            5,616.00

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	70	$                30.00	$                        2,100.00	0	$         30.00	$                        -	70	$        30.00	$            2,100.00
Purchases:	0	$                       -	$                                     -
05-Jun	162	$                34.00	$                        5,508.00	76	$         34.00	$           2,584.00	86	$        34.00	$            2,924.00
23-Jun	200	$                36.00	$                        7,200.00	200	$         36.00	$           7,200.00	0	$        36.00	$                         -
TOTAL	432		$                      14,808.00	276		$           9,784.00	156		$            5,024.00

Average Method	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	70	$                30.00	$                        2,100.00
Purchases:	0	$                       -	$                                     -
05-Jun	162	$                34.00	$                        5,508.00
23-Jun	200	$                36.00	$                        7,200.00
TOTAL	432	$                34.28	$                      14,808.00	276	$         34.28	$             9,461.28	156	$        34.28	$            5,347.68

• Answer

Periodic Inventory System
	FIFO Method	LIFO Method	Weighted Average-Cost Method
Cost of Ending Inventory	$   5,616	$   5,024	$             5,347.68
Cost of goods sold	$   9,192	$   9,784	$             9,461.28