Question

In: Accounting

Laker Company reported the following January purchases and sales data for its only product. Date Activities...

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 215 units @ $ 14.00 = $ 3,010 Jan. 10 Sales 165 units @ $ 23.00 Jan. 20 Purchase 160 units @ $ 13.00 = 2,080 Jan. 25 Sales 190 units @ $ 23.00 Jan. 30 Purchase 330 units @ $ 12.50 = 4,125 Totals 705 units $ 9,215 355 units

The Company uses a perpetual inventory system. For specific identification, ending inventory consists of 350 units, where 330 are from the January 30 purchase, 5 are from the January 20 purchase, and 15 are from beginning inventory.

Exercise 5-3 Perpetual: Inventory costing methods LO P1 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.

Solutions

Expert Solution

Ans-1- Statement showing inventory record under perpetual specific identification method:-

Receipts Cost of Goods Sold Balance
Date Units Rate Amount ($) Units Rate Amount ($) Units Rate Amount ($)
Jan.1 215 14 3,010 200 14 2,800 15 14 210
Purchases
Jan.20 160 13 2,080 155 13 2,015 5 13 65
Jan.30 330 12.5 4,125 330 12.5 4,125
Total 705 9,215 355 4,815 350 4,400

Ans-2- Statement showing inventory record under perpetual weighted average method:-

Receipts Cost of Goods Sold Balance
Date Units Rate Amount ($) Units Rate Amount ($) Units Rate Amount ($)
Jan-1 215 14 3,010
Jan-10 165 14 2,310 50 14 700
Jan-20 160 13 2,080 50 14 700
160 13 2,080
Average 210 13.24 2,780
Jan-25 190 13.24 2,516 20 13.24 264
Jan-30 330 12.5 4,125 20 13.24 264
330 12.5 4,125
Average 350 12.54 4,389
Total 490 6,025 355 4,826 350 12.54 4,389

Ans-3- Statement showing inventory record under perpetual FIFO method:

Receipts Cost of Goods Sold Balance
Date Units Rate Amount ($) Units Rate Amount ($) Units Rate Amount ($)
Jan-1 215 14 3,010
Jan-10 165 14 2,310 50 14 700
Jan-20 160 13 2,080 50 14 700
160 13 2,080
Jan-25 50 14 700
140 13 1,820 20 13 260
Jan-30 330 12.5 4,125 20 13 260
330 12.5 4,125
Total 490 6,205 355 4,830 350 4,385

Ans-4- Statement showing inventory record under perpetual LIFO method:-

Receipts Cost of Goods Sold Balance
Date Units Rate Amount ($) Units Rate Amount ($) Units Rate Amount ($)
Jan-1 215 14 3,010
Jan-10 165 14 2,310 50 14 700
Jan-20 160 13 2,080 50 14 700
160 13 2,080
Jan-25 160 13 2,080
30 14 420 20 14 280
Jan-30 330 12.5 4,125 20 14 280
330 12.5 4,125
Total 490 6,205 355 4,810 350 4,405

Ending inventory and Cost of Goods Sold under different method:

Specific Average FIFO LIFO
Ending Inventory 4,400 4,389 4,385 4,405
Cost of Goods Sold 4,815 4,826 4,830 4,810

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