Question

Using the records below, provide the information requested. Figures below relate to Poppy’s Products’ inventory of t-shirts during the first quarter of 2005. On February 5, a customer purchased 900 t-shirts for $15 each. Two weeks later, Poppy’s sold 600 shirts for $14 each.

NOTE: Two copies of identical information are provided below:

DATE     ACTIVITY UNITS COST/UNIT   TOTAL

Jan. 1    Inventory    700    $7.40    $ 5,180

Jan. 21   Purchase    800    $6.00      4,800

Feb. 10   Purchase 1,200    $6.60     7,920

Mar. 15   Purchase     500    $6.25     3,125

                                                                              

DATE ACTIVITY UNITS COST/UNIT   TOTAL

Jan. 1    Inventory    700    $7.40    $ 5,180

Jan. 21   Purchase    800    $6.00      4,800

Feb. 10   Purchase 1,200    $6.60     7,920

Mar. 15   Purchase     500    $6.25     3,125

                                                                              

(A.) Determine the following amounts if Poppy’s had used the periodic LIFO method:

                                                           

Cost of Goods Sold: $________________   Ending Inventory: $________700________

(B.) Determine the following amounts if Poppy’s had used the periodic average cost method:

                                                           

Cost of Goods Sold: $________________   Ending Inventory: $________________

Answer 1

Requirement (A)

Cost of Goods Sold: $9,725

Ending Inventory: $ 11,300

Requirement (B)

Cost of Goods Sold: $9,855

Ending Inventory: $ 11,170

Alternate answer for requirement (B)

Cost of Goods Sold: $9,856

Ending Inventory: $ 11,169

Working

	Units	Cost per unit	value
Beginning Balance	700	$                     7.40	$ 5,180
Purchases
	800	$                     6.00	$ 4,800
	1200	$                     6.60	$ 7,920
	500	$                     6.25	$ 3,125
Cost of goods available for sale	3200		$ 21,025

.

Average Cost of Inventory
Units	(A)	3200
Total Cost	(B)	$ 21,025
Average Cost	(C=B/A)	$ 6.57

.

LIFO
Total Units Available for sale		3200
Units Sold		1500
Closing Stock in Units		1700
Valuation
Ending Inventory	700	@	$               7.40	$ 5,180
	800	@	$               6.00	$ 4,800
	200	@	$               6.60	$ 1,320
Value Of Ending Inventory				$            11,300
Cost of Goods sold	21025 minus 11300			$              9,725
Weighted Average method
Total Units Available for sale		3200
Units Sold		1500
Closing Stock in Units		1700
Valuation
Ending Inventory	1700	@	$               6.57	$            11,170
Value Of Ending Inventory				$            11,170
Cost of Goods sold	(Total Purchase and opening stock Minus Closing Stock)			$              9,855