Question

REC Tire Company completed the following perpetual inventory transactions during the month of May:

May 1 Beginning invetntory 16 tires @ $65 each

May 11 purchased 10 tires @ $75 each

May 23 sold 12 tires at $90 each

May 26 purchased 14 tires at $80 each

May 29 sold 15 tires at $80 each

In the partially completed schedules provided below, show :

1. the cost of goods sold for each of the sales; and

2. the value of the inventory on hand after each sale

using the FIFO method, the LIFO method and the weighted average methods for valuing inventory. For the weighted average method, also show the average cost per unit used to compute the cost of goods sold and the inventory after the sale, rounded to the nearest penny (two decimal points). Thus your answer should show for each inventory costing method, two cost of goods sold figures (one for each sale) and two inventory values (one after for each sale). Use the schedules below for your answers. The cells for the required answers are shaded but you may use the other unshaded cells for interim figures if it will help in calculating your answers.   Please show only the total values, not the cost and quantities of the individual cost layers of the inventories or goods sold. The first answer has been computed to illustrate the form of answer required.

A. FIFO Method:
Date	Purchased/Sold	No. of Units	Unit Price	Total Price	Cost of Goods Sold	Inventory Value
1-May	Inventory	16	65	1,040
11-May	Purchased	10	75	750
23-May	Sold	12	90	1,080	780	1,010
26-May	Purchased	14	80	1,120
29-May	Sold	15	90	1,350
B. LIFO Method:
Date	Purchased/Sold	No. of Units	Unit Price	Total Price	Cost of Goods Sold	Inventory Value
1-May	Inventory	16	65	1,040
11-May	Purchased	10	75	750
23-May	Sold	12	90	1,080
26-May	Purchased	14	80	1,120
29-May	Sold	15	90	1,350
C. Weighted Average Method:
Date	Purchased/Sold	No. of Units	Unit Price	Total Price	Average Cost per Unit	Cost of Goods Sold	Inventory Value
1-May	Inventory	16	65	1,040
11-May	Purchased	10	75	750
23-May	Sold	12	90	1,080
26-May	Purchased	14	80	1,120
29-May	Sold	15	90	1,350

Answer 1

FIFO METHOD INVENTORY SCHEDULE

Date	Qty Purchased	Unit Cost	Total Cost	Qty Sold	Unit cost	Cost of goods sold	Ending Inv.Qty	Unit Cost	Total Inventory
May 1							16	65	1040
May 11	10	75	750				16	65	1040
							10	75	750
May 23				12	65	780	4	65	260
							10	75	750
May 26	14	80	1120				4	65	260
							10	75	750
							14	80	1120
May 29				4	65	260	13	80	1040
				10	75	750
				1	80	80
TOTAL						1870			1040

LIFO METHOD INVENTORY SCHEDULE

Date	Qty Purchased	Unit Cost	Total Cost	Qty Sold	Unit cost	Cost of goods sold	Ending Inv.Qty	Unit Cost	Total Inventory
May 1							16	65	1040
May 11	10	75	750				16	65	1040
							10	75	750
May 23				10	75	750	14	65	910
May 26	14	80	1120				14	65	910
							14	80	1120
May 29				14	80	1120	13	65	845
				1	65	65
TOTAL						1935			845

WEIGHTED AVERAGE COST METHOD INVENTORY SCHEDULE

Date	Qty Purchased	Unit Cost	Total Cost	Qty Sold	Unit cost	Cost of goods sold	Ending Inv.Qty	Unit Cost	Total Inventory
May 1							16	65	1040
May 11	10	75	750				16	65	1040
							10	75	750
May 23				12	68.85	826.2	14	68.85	963.9
May 26	14	80	1120				14	68.85	963.9
							14	80	1120
May 29				15	74.43	1116	13	74.43	967.52
TOTAL						1942.2			967.52

May 23 Weighted Average Cost = (1040+750)/26 = 68.85

May 29 Weighted Average Cost = (963.9+1120)/28 = 74.43

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ALL THE BEST !!!