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	185	units	@	$	11.00	=	$	2,035
Jan.	10		Sales										145	units	@	$	20.00
Jan.	20		Purchase	100	units	@	$	10.00	=		1,000
Jan.	25		Sales										125	units	@	$	20.00
Jan.	30		Purchase	270	units	@	$	9.50	=		2,565
			Totals	555	units					$	5,600		270	units

The Company uses a perpetual inventory system. For specific identification, ending inventory consists of 285 units, where 270 are from the January 30 purchase, 5 are from the January 20 purchase, and 10 are from beginning inventory.

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

ANSWER

(1) Specific Identification :-

Specific Identification	Cost of Goods Available for Sale			Cost of Goods Sold			Ending Inventory
	# of units	Cost pu	Cost of Goods Available for Sale	# of units	Cost pu	Cost of Goods Sold	# of units	Cost pu	Ending Inventory
Beginning Inventory	185	$11	$2035	175	$11	$1925	10	$11	$110
Purchases:-
Jan 20	100	$10	$1000	95	$10	$950	5	$10	$50
Jan 30	270	$9.50	$2565				270	$9.50	$2565
Total	555		$5600	270		$2875	285		$2725

(2) Weighted Average :-

Average cost	Cost of Goods Available for Sale			Cost of Goods Sold			Ending Inventory
	# of units	Cost pu	Cost of Goods Available for Sale	# of units	Cost pu	Cost of Goods Available for Sale	# of units	Cost pu	Cost of Goods Available for Sale
Beginning Inventory	185	$11	$2035	270        $10.09    $2724			285         $10.09   $2876
Purchases:-
Jan 20	100	$10	$1000
Jan 30	270	$9.50	$2565
Total	555		$5600	270		$2724	285		$2876

Avg cost per unit = Total cost available for sale/No of units available for sale

     = $5600/555 = $10.09

(3) FIFO :-

Specific Identification	Cost of Goods Available for Sale			Cost of Goods Sold			Ending Inventory
	# of units	Cost pu	Cost of Goods Available for Sale	# of units	Cost pu	Cost of Goods Sold	# of units	Cost pu	Ending Inventory
Beginning Inventory	185	$11	$2035	185	$11	$2035
Purchases:-
Jan 20	100	$10	$1000	85	$10	$850	15	$10	$150
Jan 30	270	$9.50	$2565				270	$9.50	$2565
Total	555		$5600	270		$2885	285		$2715

(4) LIFO :-

Specific Identification	Cost of Goods Available for Sale			Cost of Goods Sold			Ending Inventory
	# of units	Cost pu	Cost of Goods Available for Sale	# of units	Cost pu	Cost of Goods Sold	# of units	Cost pu	Ending Inventory
Beginning Inventory	185	$11	$2035				185	$11	$2035
Purchases:-
Jan 20	100	$10	$1000				100	$10	$1000
Jan 30	270	$9.50	$2565	270	$9.50	$2565
Total	555		$5600	270		$2565	285		$3035