Question

Use the following information for the Exercises below.

[The following information applies to the questions displayed below.]

Laker Company reported the following January purchases and sales data for its only product.

Date			Activities	Units Acquired at Cost								Units sold at Retail
Jan.	1		Beginning inventory	215	units	@	$	14.00	=	$	3,010
Jan.	10		Sales										165	units	@	$	23.00
Jan.	20		Purchase	160	units	@	$	13.00	=		2,080
Jan.	25		Sales										190	units	@	$	23.00
Jan.	30		Purchase	330	units	@	$	12.50	=		4,125
			Totals	705	units					$	9,215		355	units

The Company uses a perpetual inventory system. For specific identification, ending inventory consists of 350 units, where 330 are from the January 30 purchase, 5 are from the January 20 purchase, and 15 are from beginning inventory.

Exercise 5-3 Perpetual: Inventory costing methods LO P1

Answer 1

Solution 1:

Computation of ending inventory and cost of goods sold under Specific Identification
Purchase Date	Available for sale			Cost of goods sold			Ending Inventory
	Activity	Units	Unit Cost	Units sold	unit cost	COGS	Ending InventoryUnits	Cost per unit	Ending Inventory Cost
Jan 1	Beginning Inventory	215	$14.00	200	$14.00	$2,800.00	15	$14.00	$210.00
Jan 20	Purchase	160	$13.00	155	$13.00	$2,015.00	5	$13.00	$65.00
Jan 30	Purchase	330	$12.50	0	$12.50	$0.00	330	$12.50	$4,125.00
		705		355		$4,815.00	350		$4,400.00

Solution 2:

Computation of ending inventory and COGS under Weighted Average Cost (Perpetual)
Date	Goods Purchased		Cost of Goods sold			Inventory Balance
	Units	Cost per unit	Units	Cost per unit	COGS	Units	Cost per unit	Inventory Balance
Jan 1						215	$14.00	$3,010.00
Jan 10			165	$14.00	$2,310.00	50	$14.00	$700.00
Jan 20	160	$13.00				50	$14.00	$700.00
						160	$13.00	$2,080.00
Average Cost						210	$13.24	$2,780.00
Jan 25			190	$13.24	$2,515.60	20	$13.22	$264.40
Jan 30	330	$12.50				20	$13.22	$264.40
						330	$12.50	$4,125.00
Total			355		$4,825.60	350	$12.54	$4,389.40

Solution 3:

Computation of ending inventory and Cost of Goods sold under FIFO (Perpetual)
Date	Goods Purchased		Cost of goods sold			Inventory Balance
	Units	Cost per unit	Units	Cost per unit	COGS	Units	Cost per unit	Inventory Balance
1-Jan						215	$14.00	$3,010.00
10-Jan			165	$14.00	$2,310.00	50	$14.00	$700.00
20-Jan	160	$13.00				50	$14.00	$700.00
						160	$13.00	$2,080.00
25-Jan			50	$14.00	$700.00	20	$13.00	$260.00
			140	$13.00	$1,820.00
30-Jan	330	$12.50				20	$13.00	$260.00
						330	$12.50	$4,125.00
Total			355		$4,830.00	350		$4,385.00

Solution 4:

Computation of ending inventory and Cost of Goods sold under LIFO (Perpetual)
Date	Goods Purchased		Cost of goods sold			Inventory Balance
	Units	Cost per unit	Units	Cost per unit	COGS	Units	Cost per unit	Inventory Balance
1-Jan						215	$14.00	$3,010.00
10-Jan			165	$14.00	$2,310.00	50	$14.00	$700.00
20-Jan	160	$13.00				50	$14.00	$700.00
						160	$13.00	$2,080.00
25-Jan			160	$13.00	$2,080.00	20	$14.00	$280.00
			30	$14.00	$420.00
30-Jan	330	$12.50				20	$14.00	$280.00
						330	$12.50	$4,125.00
Total			355		$4,810.00	350		$4,405.00