Question

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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	160	units	@	$	8.50	=	$	1,360
Jan.	10		Sales										120	units	@	$	17.50
Jan.	20		Purchase	100	units	@	$	7.50	=		750
Jan.	25		Sales										120	units	@	$	17.50
Jan.	30		Purchase	220	units	@	$	7.00	=		1,540
			Totals	480	units					$	3,650		240	units

The Company uses a perpetual inventory system. For specific identification, ending inventory consists of 240 units, where 220 are from the January 30 purchase, 5 are from the January 20 purchase, and 15 are from beginning inventory.

Required:
1. Complete the table to determine the costs assigned to ending inventory and to cost of goods sold using specific identification.
2. Determine the costs assigned to ending inventory and to cost of goods sold using weighted average. (Round cost per unit to 2 decimal places.)
3. Determine the costs assigned to ending inventory and to cost of goods sold using FIFO.
4. Determine the costs assigned to ending inventory and to cost of goods sold using LIFO.

Answer 1

(1)

Ending inventory under specific identification method = (220 * 7) + (5 * 7.5) + (15 * 8.5) = 1,705 $

Cost of goods sold under specific identification method = (145 * 8.5) + (95 * 7.5) = 1,945 $

(2)

Calculation as per weighted average method:-

Date	Purchase	Cost of goods sold	Inventory on hand
	Qty	unit cost	Amount	Qty	unit cost	Amount	Qty	unit cost	Amount
Jan-01							160	8.5	1360.00
Jan-10				120	8.5	1020	40	8.5	340.00
Jan-20	100	7.5	750				140	7.79	1090.00
Jan-25				120	7.79	934.29	20	7.79	155.71
Jan-30	220	7	1540				240	7.07	1695.71
Total				240	8.14	1954.29

Ending inventory as per weighted average method = 1,695.71 $

Cost of goods sold as per weighted average method = 1,954.29 $

(3) Calculation as per FIFO method:-

Date	Purchase	Cost of goods sold	Inventory on hand
	Qty	unit cost	Amount	Qty	unit cost	Amount	Qty	unit cost	Amount
Jan-01							160	8.5	1360.00
Jan-10				120	8.5	1020	40	8.5	340.00
Jan-20	100	7.5	750				40 100	8.5 7.5	340 750
Jan-25				40 80	8.5 7.5	340 600	20	7.5	150
Jan 30	220	7	1540				20 220	7.5 7	150 1540

Ending Inventory as per FIFO method = 1,690 $

Cost of goods sold as per FIFO method= 1,960 $

(4)

Calculation as per LIFO method:-

Date	Purchase	Cost of goods sold	Inventory on hand
	Qty	unit cost	Amount	Qty	unit cost	Amount	Qty	unit cost	Amount
Jan-01							160	8.5	1360.00
Jan-10				120	8.5	1020	40	8.5	340.00
Jan-20	100	7.5	750				40 100	8.5 7.5	340 750
Jan-25				100 20	7.5 8.5	750 170	20	8.5	170
Jan- 30	220	7	1540				20 220	8.5 7	170 1540

Closing inventory as per LIFO method = 1,710 $

Cost of goods sold as per LIFO method = 1,940 $