Question

In: Accounting

Swifty Distribution markets CDs of numerous performing artists. At the beginning of March, Swifty had in...

Swifty Distribution markets CDs of numerous performing artists. At the beginning of March, Swifty had in beginning inventory 3,900 CDs with a unit cost of $7. During March, Swifty made the following purchases of CDs. March 5 4,875 @ $8 March 21 7,850 @ $10 March 13 6,825 @ $9 March 26 5,800 @ $11 During March 21,000 units were sold. Swifty uses a periodic inventory system.Determine (1) the ending inventory and (2) the cost of goods sold under each of the assumed cost flow methods (FIFO, LIFO, and average-cost). Prove the accuracy of the cost of goods sold under the FIFO and LIFO methods. (Round answers to 0 decimal places, e.g. 1,250. Use weighted-average unit cost rounded to 3 decimal places for computations.)

Solutions

Expert Solution

A) FIFO Method-

FIFO
Date Purchase Cost of goods sold Inventory balance
Units $/Units $ Total Units $/Units $ Total Units $/Units $ Total
Mar. 1 Opening Balance 3900 7 27300
Mar. 5 4875 8 39000 3900 7 27300
4875 8 39000
Mar. 21 7850 10 78500 3900 7 27300
4875 8 39000
7850 10 78500
Mar. 13 6825 9 61425 3900 7 27300
4875 8 39000
7850 10 78500
6825 9 61425
Mar. 26 5800 11 63800 3900 7 27300
4875 8 39000
7850 10 78500
6825 9 61425
5800 11 63800
Cost of goods sold 3900 7 27300 2450 9 22050
4875 8 39000 5800 11 63800
7850 10 78500
4375 9 39375
Closing Balance 2450 9 22050
5800 11 63800

Under the FIFO method, Closing Balance=8250Units for $85,850

Accuracy Test (Under FIFO)

Date Units Cost per unit (In $) Total Cost (In $)
Mar. 1 (Op. Inv.) 3900 7 27300
Mar. 5 (Purc.) 4875 8 39000
Mar. 21 (Purc.) 7850 10 78500
Mar. 13 (Purc.) 6825 9 61425
Mar. 26 (Purc.) 5800 11 63800
Cost of goods available for sale 29250 270025
Less- Cost of goods sold 21000 184175
Ending Inventory 8250 85850

B) LIFO Method-

Date Purchase Cost of goods sold Inventory balance
Units $/Units $ Total Units $/Units $ Total Units $/Units $ Total
Mar. 1 Opening Balance 3900 7 27300
Mar. 5 4875 8 39000 3900 7 27300
4875 8 39000
Mar. 21 7850 10 78500 3900 7 27300
4875 8 39000
7850 10 78500
Mar. 13 6825 9 61425 3900 7 27300
4875 8 39000
7850 10 78500
6825 9 61425
Mar. 26 5800 11 63800 3900 7 27300
4875 8 39000
7850 10 78500
6825 9 61425
5800 11 63800
Cost of goods sold 5800 11 63800 3900 7 27300
6825 9 61425 4350 8 34800
7850 10 78500
525 8 4200
Closing Balance 3900 7 27300
4350 8 34800

Under the LIFO method, Closing Balance=8250Units for $62,100

Accuracy Test (Under LIFO)

Date Units Cost per unit (In $) Total Cost (In $)
Mar. 1 (Op. Inv.) 3900 7 27300
Mar. 5 (Purc.) 4875 8 39000
Mar. 21 (Purc.) 7850 10 78500
Mar. 13 (Purc.) 6825 9 61425
Mar. 26 (Purc.) 5800 11 63800
Cost of goods available for sale 29250 270025
Less- Cost of goods sold 21000 207925
Ending Inventory 8250 62100

C) Weighted-average cost method-

Date Purchase Cost of goods sold Inventory balance AVERAGE-W. COST CALCULATION AVERAGE-W. COST
Units $/Units $ Total Units $/Units $ Total Units $/Units $ Total
Mar. 1 Opening Balance 3900 7 27300 27300/3900 7
Mar. 5 4875 8 39000 3900 7 27300 66300/8775 7.556
4875 8 39000
Mar. 21 7850 10 78500 3900 7 27300 144800/16625 8.710
4875 8 39000
7850 10 78500
Mar. 13 6825 9 61425 3900 7 27300 206225/23450 8.794
4875 8 39000
7850 10 78500
6825 9 61425
Mar. 26 5800 11 63800 3900 7 27300 270025/29250 9.232
4875 8 39000
7850 10 78500
6825 9 61425
5800 11 63800
Cost of goods sold 21000 9.232 193872 8250 9.232 76164
Closing Balance 8250 9.232 76164

NOTE- AVERAGE-W. COST PER UNIT=TOTAL UNIT COST/ NO. OF UNITS.

Please mention your doubts in the comment box if any.

Thanks & all the best....

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

Oriole Company markets CDs of numerous performing artists. At the beginning of March, Oriole had in...
Oriole Company markets CDs of numerous performing artists. At the beginning of March, Oriole had in beginning inventory 2,600 CDs with a unit cost of $8. During March, Oriole made the following purchases of CDs. March 5 2,100 @ $9 March 21 5,500 @ $11 March 13 3,700 @ $10 March 26 2,100 @ $12 During March 12,000 units were sold. Oriole uses a periodic inventory system. Determine (1) the ending inventory and (2) the cost of goods sold under...
Blue Spruce Distribution markets CDs of numerous performing artists. At the beginning of March, Blue Spruce...
Blue Spruce Distribution markets CDs of numerous performing artists. At the beginning of March, Blue Spruce had in beginning inventory 4,200 CDs with a unit cost of $7. During March, Blue Spruce made the following purchases of CDs. March 5 5,250 @ $8 March 21 8,300 @ $10 March 13 7,350 @ $9 March 26 6,400 @ $11 During March 23,000 units were sold. Blue Spruce uses a periodic inventory system. B2. Determine (1) the ending inventory and (2) the...
Cheyenne Corp. markets CDs of numerous performing artists. At the beginning of March, Cheyenne Corp. had...
Cheyenne Corp. markets CDs of numerous performing artists. At the beginning of March, Cheyenne Corp. had in beginning inventory 2,390 CDs with a unit cost of $7. During March, Cheyenne Corp. made the following purchases of CDs. March 5 2,030 @ $8 March 21 5,060 @ $10 March 13 3,260 @ $9 March 26 1,800 @ $11 During March 11,470 units were sold. Cheyenne Corp. uses a periodic inventory system. Determine the cost of goods available for sale (b) Calculate...
Problem 6-2A (Part Level Submission) Dunbar Distribution markets CDs of numerous performing artists. At the beginning...
Problem 6-2A (Part Level Submission) Dunbar Distribution markets CDs of numerous performing artists. At the beginning of March, Dunbar had in beginning inventory 3,613 CDs with a unit cost of $10. During March, Dunbar made the following purchases of CDs. March 5 2,890 @ $12 March 13 5,058 @ $13 March 21 7,225 @ $14 March 26 2,890 @ $16 During March 17,340 units were sold. Dunbar uses a periodic inventory system. Costs of goods available for sale $283, 954...
Current Attempt in Progress Oriole Company markets CDs of numerous performing artists. At the beginning of...
Current Attempt in Progress Oriole Company markets CDs of numerous performing artists. At the beginning of March, Oriole had in beginning inventory 2,600 CDs with a unit cost of $8. During March, Oriole made the following purchases of CDs. March 5 2,100 @ $9 March 21 5,500 @ $11 March 13 3,700 @ $10 March 26 2,100 @ $12 During March 12,000 units were sold. Oriole uses a periodic inventory system. Determine the cost of goods available for sale. The...
Glee Distribution markets CDs of the performing artist Unique. At the beginning of October, Glee had...
Glee Distribution markets CDs of the performing artist Unique. At the beginning of October, Glee had in beginning inventory 4,800 of Unique’s CDs with a unit cost of $7. During October, Glee made the following purchases of Unique’s CDs. October 3 - 6,000 @ $8 October 9- 8,500 @ $9 October 19-7,000 @ $10 October 25-9500 @ $11 Determine the cost of goods available for sale. Determine (1) the ending inventory and (2) the cost of goods sold under each...
Bridgeport Distribution markets CDs of the performing artist Fishe. At the beginning of October, Bridgeport had...
Bridgeport Distribution markets CDs of the performing artist Fishe. At the beginning of October, Bridgeport had in beginning inventory 2,400 of Fishe’s CDs with a unit cost of $6. During October, Bridgeport made the following purchases of Fishe’s CDs. Oct. 3 3,000 @ $7 Oct. 19 3,600 @ $9 Oct. 9 4,200 @ $8 Oct. 25 4,800 @ $10 During October, 13,080 units were sold. Bridgeport uses a periodic inventory system. Determine the cost of goods available for sale. Cost...
Express Distribution markets CDs of the performing artist Fishe. At the beginning of October, Express had...
Express Distribution markets CDs of the performing artist Fishe. At the beginning of October, Express had in beginning inventory 3,100 of Fishe’s CDs with a unit cost of $7. During October, Express made the following purchases of Fishe’s CDs. Oct. 3 3,875 @ $8 Oct. 19 4,650 @ $10 Oct. 9 5,425 @ $9 Oct. 25 6,200 @ $11 During October, 16,895 units were sold. Express uses a periodic inventory system. Determine the cost of goods available for sale. Cost...
Bonita Distribution markets CDs of the performing artist Unique. At the beginning of October, Bonita had...
Bonita Distribution markets CDs of the performing artist Unique. At the beginning of October, Bonita had in beginning inventory 2,000 of Unique’s CDs with a unit cost of $7. During October, Bonita made the following purchases of Unique’s CDs. Oct. 3 2,500 @ $8 Oct. 19 3,000 @ $10 Oct. 9 3,500 @ $9 Oct. 25 4,000 @ $11 During October, 10,950 units were sold. Bonita uses a periodic inventory system. Determine the cost of goods available for sale. Cost...
Express Distribution markets CDs of the performing artist Fishe. At the beginning of October, Express had...
Express Distribution markets CDs of the performing artist Fishe. At the beginning of October, Express had in beginning inventory 2,000 of Fishe’s CDs with a unit cost of $7. During October, Express made the following purchases of Fishe’s CDs. Oct. 3 2,500 @ $8 Oct. 19 3,000 @ $10 Oct. 9 3,500 @ $9 Oct. 25 4,000 @ $11 During October, 10,900 units were sold. Express uses a periodic inventory system. I need help figuring out how to use the...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT