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 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.

Answer 1

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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