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	140	units	@	$	6.00	=	$	840
Jan.	10	Sales										100	units	@	$	15
Jan.	20	Purchase	60	units	@	$	5.00	=		300
Jan.	25	Sales										80	units	@	$	15
Jan.	30	Purchase	180	units	@	$	4.50	=		810
		Totals	380	units					$	1,950		180	units

The Company uses a perpetual inventory system. For specific identification, ending inventory consists of 200 units, where 180 are from the January 30 purchase, 5 are from the January 20 purchase, and 15 are from beginning inventory.

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

Solution 1:

Specific Identification:

Cost of ending inventory = (180*$4.50) + (5*$5) + (15*$6) = $925

Cost of goods available for sale = $1,950

Cost of goods sold = Cost of goods available for sale - Ending inventory = $1,950 - $925 = $1,025

Solution 2:

Computation of ending inventory COGS under Weighted Average Cost
Date	Beginning Inventory			Purchase			Cost of Goods Sold			Ending Inventory
	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount
1-Jan	140	$6.00	$840	0	$0.00	$0	0	$0.00	$0	140	$6.00	$840
10-Jan	140	$6.00	$840	0	$0.00	$0	100	$6.00	$600	40	$6.00	$240
20-Jan	40	$6.00	$240	60	$5.00	$300	0	$0.00	$0	100	$5.40	$540
25-Jan	100	$5.40	$540	0	$0.00	$0	80	$5.40	$432	20	$5.40	$108
30-Jan	20	$5.40	$108	180	$4.50	$810	0	$0.00	$0	200	$4.59	$918
Total							180		$1,032	200		$918

Solution 3:

Computation of ending inventory COGS under FIFO
Date	Beginning Inventory			Purchase			Cost of Goods Sold			Ending Inventory
	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount
1-Jan	140	$6.00	$840.00	0	$0.00	$0.00	0	$0.00	$0.00	140	$6.00	$840.00
10-Jan	140	$6.00	$840.00	0	$0.00	$0.00	100	$6.00	$600.00	40	$6.00	$240.00
20-Jan	40	$6.00	$240.00	60	$5.00	$300.00	0	$0.00	$0.00	40	$6.00	$240.00
										60	$5.00	$300.00
25-Jan	40	$6.00	$240.00	0	$0.00	$0.00	40	$6.00	$240.00	20	$5.00	$100.00
	60	$5.00	$300.00				40	$5.00	$200.00
30-Jan	20	$5.00	$100.00	180	$4.50	$810.00	0	$0.00	$0.00	20	$5.00	$100.00
										180	$4.50	$810.00
Total							180		$1,040.00	200		$910.00

Solution 4:

Computation of ending inventory COGS under LIFO
Date	Beginning Inventory			Purchase			Cost of Goods Sold			Ending Inventory
	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount
1-Jan	140	$6.00	$840.00	0	$0.00	$0.00	0	$0.00	$0.00	140	$6.00	$840.00
10-Jan	140	$6.00	$840.00	0	$0.00	$0.00	100	$6.00	$600.00	40	$6.00	$240.00
20-Jan	40	$6.00	$240.00	60	$5.00	$300.00	0	$0.00	$0.00	40	$6.00	$240.00
										60	$5.00	$300.00
25-Jan	40	$6.00	$240.00	0	$0.00	$0.00	60	$5.00	$300.00	20	$6.00	$120.00
	60	$5.00	$300.00				20	$6.00	$120.00
30-Jan	20	$6.00	$120.00	180	$4.50	$810.00	0	$0.00	$0.00	20	$6.00	$120.00
										180	$4.50	$810.00
Total							180		$1,020.00	200		$930.00