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. Exercise 6-3 Perpetual: Inventory costing methods LO P1 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:

Computation of COGS and ending inventory - Specific identification
Particulars	Cost of goods available for sale			Cost of goods sold			Ending Inventory
	Nos of units	Unit Cost	Cost of goods available for sale	Nos of units sold	Unit Cost	Cost of goods sold	Nos of units in ending inventory	Unit Cost	Ending inventory
Beginning inventory	140	$6.00	$840	125	$6.00	$750.00	15	$6.00	$90.00
Purchases:
20-Jan	60	$5.00	$300	55	$5.00	$275.00	5	$5.00	$25.00
30-Jan	180	$4.50	$810	0	$4.50	$0.00	180	$4.50	$810.00
Total	380		$1,950	180		$1,025.00	200		$925.00

solution 2:

Computation of ending inventory COGS under Weighted Average Cost - Laker Company
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
25-Mar	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 - Laker Company
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 - Laker Company
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