Question

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	140	units	@	$	6.00	=	$	840
Jan.	10	Sales										100	units	@	$	15
Jan.	20	Purchase	60	units	@	$	5.00	=		300
Jan.	25	Sales										80	units	@	$	15
Jan.	30	Purchase	180	units	@	$	4.50	=		810
		Totals	380	units					$	1,950		180	units

The Company uses a perpetual inventory system. For specific identification, ending inventory consists of 200 units, where 180 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 cost assigned to ending inventory and cost of goods sold using specific identification.
2. Determine the cost assigned to ending inventory and to cost of goods sold using weighted average.
3. Determine the cost assigned to ending inventory and to cost of goods sold using FIFO.
4. Determine the cost assigned to ending inventory and to cost of goods sold using LIFO.

Answer 1

Ans.1	Specific Identification:
	Total Available				Ending Inventory			Cost of goods sold
	Date	Units	Rate	Amount	Units	Rate	Amount	Units	Rate	Amount
	Jan.1	140	6	840	15	6	90	125	6	750
	Jan.20	60	5	300	5	5	25	55	5	275
	Jan.30	180	4.5	810	180	4.5	810	0	0	0
	Total			1950			925			1025
	Sold units = Available units - Ending inventory units
	Cost of goods sold =    1025
	Ending invnetory =       925
Ans.2	Weighted average method:
		Purchase			Sold			Balance
	Date	Units	Rate	Total cost	Units	Rate	Total cost	Units	Rate	Total cost
	1-Jan	140	6	840				140	6	840
	10-Jan				100	6	600	40	6	240
	20-Jan	60	5	300				100	5.4	540
	25-Jan				80	5.4	432	20	5.4	108
	jan.30	180	4.5	810				200	4.6	918
	Total				COGS		1032	End. Inv.		918
	Cost of goods sold =    1032
	Ending invnetory =       918
	Weighted average unit after each purchase or sales = Cost of Available balance / Units of available balance
Ans.3	Perpetual FIFO:
		Purchase			Sold			Balance
	Date	Units	Rate	Total cost	Units	Rate	Total cost	Units	Rate	Total cost
	1-Jan	140	6	840				140	6	840
	10-Jan				100	6	600	40	6	240
	20-Jan	60	5	300				40	6	240
								60	5	300
	25-Jan				40	6	240
					40	5	200	20	5	100
	jan.30	180	4.5	810				20	5	100
								180	4.5	810
	Total				COGS		1040	End. Inv.		910
	Cost of goods sold =    1040
	Ending invnetory = 910
Ans.4	Perpetual LIFO:
		Purchase			Sold			Balance
	Date	Units	Rate	Total cost	Units	Rate	Total cost	Units	Rate	Total cost
	1-Jan	140	6	840				140	6	840
	10-Jan				100	6	600	40	6	240
	20-Jan	60	5	300				40	6	240
								60	5	300
	25-Jan				60	5	300
					20	6	120	20	6	120
	jan.30	180	4.5	810				20	6	120
								180	4.5	810
	Total				COGS		1020	End. Inv.		930
	Cost of goods sold =    1020
	Ending invnetory = 930