Question

In: Accounting

Kirtland Corporation uses a periodic inventory system. At the end of the annual accounting period, December...

Kirtland Corporation uses a periodic inventory system. At the end of the annual accounting period, December 31, the accounting records for the most popular item in inventory showed the following:

Transactions Units Unit Cost
Beginning inventory, January 1 370 $4.00
Transactions during the year:
a. Purchase, January 30 270 3.10
b. Purchase, May 1 430 5.00
c. Sale ($6 each) (130)
d. Sale ($6 each) (670)

Required:

b. & c. Compute the amount of ending inventory and cost of goods sold at December 31, under Average cost, First-in, first-out, Last-in, first-out and Specific identification inventory costing methods. For Specific identification, assume that the first sale was selected two-fifths from the beginning inventory and three-fifths from the purchase of January 30. Assume that the second sale was selected from the remainder of the beginning inventory, with the balance from the purchase of May 1.

Solutions

Expert Solution

FIFO METHDO
COST OF GOODS AVAILABLE FOR SALE COST OF GOODS SOLD CLOSING STOCK
Date Particulars Units Cost Per unit Total Units Cost Per unit Cost of Goods Sold Units Cost Per unit Ending inventory
Jan.01 Beginning Inventory                        370 $                4.00 $                  1,480                       370 $           4.00 $             1,480
Jan.30 Purchases                        270 $                3.10 $                     837                       270 $           3.10 $                 837
May.01 Purchases                        430 $                5.00 $                  2,150                       160 $           5.00 $                 800                    270 $           5.00 $             1,350
Total Goods Available For sale                    1,070 $                  4,467                       800 $             3,117                    270 $             1,350
LIFO METHDO
COST OF GOODS AVAILABLE FOR SALE COST OF GOODS SOLD CLOSING STOCK
Date Particulars Units Cost Per unit Total Units Cost Per unit Cost of Goods Sold Units Cost Per unit Ending inventory
Jan.01 Beginning Inventory                        370 $                4.00 $                  1,480                       100 $           4.00 $                 400                    270 $           4.00 $             1,080
Jan.30 Purchases                        270 $                3.10 $                     837                       270 $           3.10 $                 837
May.01 Purchases                        430 $                5.00 $                  2,150                       430 $           5.00 $             2,150
Total Goods Available For sale                    1,070 $                  4,467                       800 $             3,387                    270 $             1,080
AVERAGE COST METHOD
COST OF GOODS AVAILABLE FOR SALE COST OF GOODS SOLD CLOSING STOCK
Date Particulars Units Cost Per unit Total No. of Kg Cost Per unit Cost of Goods Sold No. of Kg Cost Per unit Ending inventory
Jan.01 Beginning Inventory                        370 $                4.00 $                  1,480
Jan.30 Purchases                        270 $                3.10 $                     837
May.01 Purchases                        430 $                5.00 $                  2,150
Total Goods Available For sale / Avg. Price                    1,070                    4.17                      4,467                       800               4.17                 3,340                    270               4.17                 1,127
Specific Identification Method
COST OF GOODS AVAILABLE FOR SALE COST OF GOODS SOLD CLOSING STOCK
Date Particulars Units Cost Per unit Total No. of Kg Cost Per unit Cost of Goods Sold No. of Kg Cost Per unit Ending inventory
Jan.01 Beginning Inventory                        370 $                4.00 $                  1,480                       370 $           4.00 $             1,480
Jan.30 Purchases                        270 $                3.10 $                     837                          78 $           3.10 $                 242                    192 $           3.10 $                 595
May.01 Purchases                        430 $                5.00 $                  2,150

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