In: Accounting
In its first month of operations, Literacy for the Illiterate opened a new bookstore and bought merchandise in the following order: (1) 400 units at $6 on January 1, (2) 600 units at $8 on January 8, and (3) 870 units at $9 on January 29. Assume 1,070 units are on hand at the end of the month. |
Calculate the cost of goods available for sale, cost of goods sold, and ending inventory under the (a) FIFO, (b) LIFO, and (c) weighted average cost flow assumptions. Assume perpetual inventory system and sold 800 units between January 9 and January 28. (Round your intermediate calculations to 2 decimal places.) |
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1. FIFO
Transaction |
Closing balance |
||||||
Date |
Particulars |
Units |
Price |
Value |
Units |
Price |
Value |
Jan-01 |
Purchase |
400 |
6 |
2400 |
400 |
6 |
2400 |
Jan-08 |
Purchase |
600 |
8 |
4800 |
1000 |
7.20 |
7200 |
B/w Jan 09 and Jan 28 |
Sale |
800 |
400 @ 6 |
5600 |
200 |
8 |
1600 |
Jan-29 |
Purchase |
870 |
9 |
7830 |
1070 |
200 @ 8 |
9430 |
Goods available for sale as on Jan 09 = 1000 units (400 @ $6 and 600 @ $8) of $ 7200
Cost of goods sold = $5600 (400 @ $6 and 400 @ $8)
Ending inventory = 1070 units (200 @ $8 and 800 @ $9) of $ 9430
2. LIFO
Transaction |
Closing balance |
||||||
Date |
Particulars |
Units |
Price |
Value |
Units |
Price |
Value |
Jan-01 |
Purchase |
400 |
6 |
2400 |
400 |
6 |
2400 |
Jan-08 |
Purchase |
600 |
8 |
4800 |
1000 |
400 @ 6 |
7200 |
B/w Jan 09 and Jan 28 |
Sale |
800 |
600 @ 8 |
6000 |
200 |
6 |
1200 |
Jan-29 |
Purchase |
870 |
9 |
7830 |
1070 |
200 @ 6 |
9030 |
Goods available for sale as on Jan 09 = 1000 units (400 @ $6 and 600 @ $8) of $ 7200
Cost of goods sold = $6000 (600 @ $8 and 200 @ $6)
Ending inventory = 1070 units (200 @ $6 and 800 @ $9) of $ 9030
3. Weighted average cost method
Transaction |
Closing balance |
||||||
Date |
Particulars |
Units |
Price |
Value |
Units |
Price |
Value |
Jan-01 |
Purchase |
400 |
6 |
2400 |
400 |
6 |
2400 |
Jan-08 |
Purchase |
600 |
8 |
4800 |
1000 |
7.20 |
7200 |
B/w Jan 09 and Jan 28 |
Sale |
800 |
7.20 |
5760 |
200 |
7.20 |
1440 |
Jan-29 |
Purchase |
870 |
9 |
7830 |
1070 |
8.66 |
9270 |
Goods available for sale as on Jan 09 = 1000 units @7.20 per unit = $ 7200
Cost of goods sold = $5760 (800 units @ 7.20 per unit)
Ending inventory = 1070 units $9270 value