Question

Specific Identification, FIFO, LIFO, and Weighted-Average

Swing Company's beginning inventory and purchases during the fiscal year ended September 30, 20-2, were as follows:

		Units	Unit Price	Total Cost
October 1, 20-1	Beginning inventory	400	$20		$8,000
October 18	1st purchase	490	20.5		10,045
November 25	2nd purchase	230	21.5		4,945
January 12, 20-2	3rd purchase	330	22		7,260
March 17	4th purchase	890	23.5		20,915
June 2	5th purchase	800	24		19,200
August 21	6th purchase	200	25		5,000
September 27	7th purchase	680	26		17,680
		4,020			$93,045

Use the following information for the specific identification method.

There are 1,300 units of inventory on hand on September 30, 20-2. Of these 1,300 units:

100 are from October 18, 20-1	1st purchase
200 are from January 12, 20-2	3rd purchase
100 are from March 17	4th purchase
400 are from June 2	5th purchase
200 are from August 21	6th purchase
300 are from September 27	7th purchase

Required:

Calculate the total amount to be assigned to cost of goods sold for the fiscal year ended September 30, 20-2, and ending inventory on September 30, 20-2, under each of the following periodic inventory methods. For the weighted-average method, round the average unit cost to two decimal places. Round all final answers to the nearest dollar.

Answer 1

1 . Statement showing cost of goods sold and ending inventory as per specific identification method :-

Date	particulars	receipts Rate	Receipts Quantity	Receipts Amount	Particulars	Sales (cost) Rate	Sales (cost) Quantity	Sales (cost) Amount
Oct 1, 20-1	beginning balance	400	20	8000	sales from beginning inventory	400	20	8000
Oct 18, 20-1	purchases	490	20.5	10045	sales from October 18	390	20.5	7995
Nov 25, 20-1	purchases	230	21.5	4945	sales from Nov 25	230	21.50	4945
Jan 12, 20-2	purchases	330	22	7260	sales from Jan 12	130	22	2860
Mar 17, 20-2	purchases	890	23.5	20915	sales from Mar 17	790	23.5	18565
June 2, 20-2	purchases	800	24	19200	sales from June 2	400	24	9600
Aug 21, 20-2	purchases	200	25	5000	sales from Sept 27	380	26	9880
Sept 27, 20-2	purchases	680	26	17680	cost of goods sold	2720	22.74	61845
					Balance
					Oct 18	100	20.5	2050
					Jan 12	200	22	4400
					Mar 17	100	23.50	2350
					June 2	400	24	9600
					Aug 21	200	25	5000
					Sept 27	300	26	7800
					Balance	1300	26	31200

Thus, as per specific identification method cost of goods sold will be $61845 and ending inventory would be $31200.

2. Calculation of cost of goods sold and ending inventory as per FIFO method.

We are left with ending inventory of 1300 units, since in FIFO we assume that sold goods are the earliest therefore the ending inventory would be those which were purchased at the last.

Therefore 1300 will comprise of following purchases

Date of purchase	Quantity	rate	amount
Sept 27, 20-2	680	26	17680
Aug 21, 20-2	200	25	5000
June 2, 20-2	420	24	10080
Total	1300	25.2	$32760

Also cost of goods sold = goods available for sale - ending inventory

= 93045-32760

Cost of goods sold = $60285

Therefore, as per FIFO method cost of goods sold is $60285 and ending inventory is $32760.

3. As per LIFO method, goods sold are the one which are purchased latest, therefore ending inventory comprises of goods which were purchased earliest. Accordingly ending inventory will be :-

Date of purchase	Quantity	rate	amount
Oct 1, 20-1	400	20	8000
Oct 18, 20-1	490	20.50	10045
Nov 25, 20-1	230	21.50	4945
Jan 12, 20-2	180	22	3960
Total	1300	20.73	$26950

Also cost of goods sold = goods available for sale - ending inventory

93045-26950

Cost of goods sold = $66095.

Therefore as per LIFO method cost of goods sold = $66095 and ending inventory is $26950.

4. Calculation of cost of goods sold and ending inventory as per weighted average method.

Weighted average cost of goods per unit available = $93045/4020 = $23.15

Cost of goods sold = units sold x weighted average rate per unit

(4020-1300)x23.15 = $62968

Ending inventory = 1300x23.15 = $30095

Therefore as per weighter average method cost of goods sold is $62968 and ending inventory is $30095.