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Problem 6-7AA Periodic: Alternative cost flows LO P3 Seminole Company began year 2017 with 23,000 units...

Problem 6-7AA Periodic: Alternative cost flows LO P3

Seminole Company began year 2017 with 23,000 units of product in its January 1 inventory costing $15.60 each. It made successive purchases of its product in year 2017 as follows. The company uses a periodic inventory system. On December 31, 2017, a physical count reveals that 41,000 units of its product remain in inventory.
  

Mar. 7 34,000 units @ $18.60 each
May 25 36,000 units @ $22.60 each
Aug. 1 26,000 units @ $24.60 each
Nov. 10 36,000 units @ $27.60 each


Required:
1. Compute the number and total cost of the units available for sale in year 2017.
2. Compute the amounts assigned to the 2017 ending inventory and the cost of goods sold using (a) FIFO, (b) LIFO, and (c) weighted average.

Solutions

Expert Solution

1 Units Rate Amount
Opening Inventory 23000 15.60 358800
Add: Purchases
07-Mar 34000 18.60 632400
25-May 36000 22.60 813600
01-Aug 26000 24.60 639600
10-Nov 36000 27.60 993600
Total Inventory Available 155000 3438000
Closing Inventory 41000
Sold Units 114000
2 Periodic Inventory System:
FIFO:(First In First Out i.e Ending Inventory will be from Latest Purchases) LIFO:(Last In First Out i.e Ending Inventory will be from Opening and First Purchases)
Ending Inventory: Units Rate Amount Ending Inventory: Units Rate Amount
10-Nov 36000 27.60 993600 Opening Inventory 23000 15.60 358800
01-Aug 5000 24.60 123000 07-Mar 18000 18.60 334800
41000 1116600 41000 693600
Total Inventory Available 155000 3438000 Total Inventory Available 155000 3438000
Less: Ending Inventory 41000 1116600 Less: Ending Inventory 41000 693600
Cost of Goods Sold 114000 2321400 Cost of Goods Sold 114000 2744400
Average Cost:
Units Rate Amount
Opening Inventory 23000 15.60 358800
Add: Purchases
07-Mar 34000 18.60 632400
25-May 36000 22.60 813600
01-Aug 26000 24.60 639600
10-Nov 36000 27.60 993600
Total Inventory Available 155000 22.18 3438000
(3438000/155000)
Units Rate Amount
Closing Inventory 41000 22.18 909406.5
Sold Units 114000 22.18 2528594
3438000

ekkarill92 answered 1 year ago
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