Question

Date			Activities	Units Acquired at Cost								Units sold at Retail
Jan.	1		Beginning inventory	210	units	@	$	13.50	=	$	2,835
Jan.	10		Sales										160	units	@	$	22.50
Jan.	20		Purchase	150	units	@	$	12.50	=		1,875
Jan.	25		Sales										180	units	@	$	22.50
Jan.	30		Purchase	320	units	@	$	12.00	=		3,840
			Totals	680	units					$	8,550		340	units

The Company uses a perpetual inventory system. For specific identification, ending inventory consists of 340 units, where 320 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

Ans. 1		Available for sale				Cost of goods sold			Ending inventory
	Purchase date	Activity	Units	Rate	Cost	Units	Rate	Cost	Units	Rate	Cost
	1-Jan	Beginning inventory	210	$13.50	$2,835.00	195	$13.50	$2,632.50	15	$13.50	$202.50
	20-Jan	Purchases	150	$12.50	$1,875.00	145	$12.50	$1,812.50	5	$12.50	$62.50
	30-Jan	Purchases	320	$12.00	$3,840.00	0	$12.00	$0.00	320	$12.00	$3,840.00
	Total					Cost of goods sold		$4,445.00	Ending inventory		$4,105.00
	Sold units = No. of units available on particular date - Ending inventory units on the same date.
Ans. 2	Weighted Average (Perpetual)
	Purchase				Cost of goods sold			Balance
	Date	Quantity	Rate	Total cost	Quantity	Rate	Total cost	Quantity	Rate	Total cost
	1-Jan	210	$13.50	$2,835.00				210	$13.50	$2,835
	10-Jan				160.00	$13.50	$2,160.00	50.00	$13.50	$675
	20-Jan	150	$12.50	$1,875.00				200	$12.75	$2,550.00
	25-Jan				180	$12.75	$2,295.00	20	$12.75	$255.00
	30-Jan	320	$12.00	$3,840.00				340	$12.04	$4,095.00
	Total				Cost of goods sold		$4,455	Cost of Ending inventory		$4,095
	*Weighted average rate is calculated by using the formula of (Total available balance / Total units available).
Ans.3	FIFO Perpetual:
	Purchase				Cost of goods sold			Balance
	Date	Quantity	Rate	Total cost	Quantity	Rate	Total cost	Quantity	Rate	Total cost
	1-Jan	210	$13.50	$2,835.00				210	$13.50	$2,835
	10-Jan				160	$13.50	$2,160.00	50	$13.50	$675
	20-Jan	150	$12.50	$1,875.00				50	$13.50	$675
								150	$12.50	$1,875.00
	25-Jan				50	$13.50	$675
					130	$12.50	$1,625.00	20	$12.50	$250.00
	30-Jan	320	$12.00	$3,840.00				20	$12.50	$250.00
								320	$12.00	$3,840.00
	Total				Cost of goods sold		$4,460	Cost of Ending inventory		$4,090
Ans. 4	Perpetual LIFO:
	Purchase				Cost of goods sold			Balance
	Date	Quantity	Rate	Total cost	Quantity	Rate	Total cost	Quantity	Rate	Total cost
	1-Jan	210	$13.50	$2,835.00				210	$13.50	$2,835
	10-Jan				160	$13.50	$2,160.00	50	$13.50	$675
	20-Jan	150	$12.50	$1,875.00				50	$13.50	$675
								150	$12.50	$1,875.00
	25-Jan				150	$12.50	$1,875.00
					30	$13.50	$405	20.00	$13.50	$270
	30-Jan	320	$12.00	$3,840.00				20.00	$13.50	$270
								320	$12.00	$3,840.00
	Total				Cost of goods sold		$4,440	Cost of Ending inventory		$4,110