Question

Oahu Kiki tracks the number of units purchased and sold throughout each accounting period but applies its inventory costing method at the end of each month, as if it uses a periodic inventory system. Assume Oahu Kiki’s records show the following for the month of January. Sales totaled 330 units.

	Date	Units			Unit Cost			Total Cost
Beginning Inventory	January 1		300		$	90		$	27,000
Purchase	January 15		400			100			40,000
Purchase	January 24		300			120			36,000

Required:

1.	Calculate the number and cost of goods available for sale.

2.	Calculate the number of units in ending inventory.

3.	Calculate the cost of ending inventory and cost of goods sold using the (a) FIFO, (b) LIFO, and (c) weighted average cost methods.

Answer 1

Requirement 1

	Units	Cost per unit	value
Beginning Balance	300	$ 90.00	$      27,000.00
Purchases
15-Jan	400	$ 100.00	$      40,000.00
24-Jan	300	$ 120.00	$      36,000.00
	1000		$ 103,000.000

Total Cost of goods Available for sale = $103,000

Requirement 2

Total Units Available for sale		1000
Units Sold		330
Number of Units in ending inventory	(1000-330)	670

Number of Units in ending inventory = 670

Requirement 3

	FIFO	LIFO	Weighted Average
Ending Inventory	$    73,000.000	$ 64,000.000	$ 69,010.000
Cost of Goods Sold	$    30,000.000	$ 39,000.000	$ 33,990.000

Working Note

Average Cost of Inventory
Units	(A)	1000
Total Cost	(B)	$ 103,000.00
Average Cost	(C=B/A)	$        103.000

FIFO
Total Units Available for sale		1000
Units Sold		330
Closing Stock in Units		670
Valuation
Closing stock	300	@	$          120.00	$         36,000.000
	370	@	$          100.00	$        37,000.000
Value Of Closing Stock				$         73,000.000
Cost of Goods sold	(103000-73000)			$         30,000.000

.

LIFO
Total Units Available for sale		1000
Units Sold		330
Closing Stock in Units		670
Valuation
Closing stock	300	@	$            90.00	$         27,000.000
	370	@	$          100.00	$         37,000.000
Value Of Closing Stock				$         64,000.000
Cost of Goods sold	(103000-64000)			$         39,000.000

.

Weighted Average method
Total Units Available for sale		1000
Units Sold		330
Closing Stock in Units		670
Valuation
Closing stock	670	@	$103.00	$         69,010.000
Value Of Closing Stock				$         69,010.000
Cost of Goods sold	(Total Purchase and opening stock Minus Closing Stock)			$         33,990.000