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 170 units @ $ 9.50 = $ 1,615 Jan. 10 Sales 130 units @ $ 18.50 Jan. 20 Purchase 120 units @ $ 8.50 = 1,020 Jan. 25 Sales 130 units @ $ 18.50 Jan. 30 Purchase 240 units @ $ 8.00 = 1,920 Totals 530 units $ 4,555 260 units The Company uses a perpetual inventory system. For specific identification, ending inventory consists of 270 units, where 240 are from the January 30 purchase, 5 are from the January 20 purchase, and 25 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

Solution 1:

Computation of ending inventory and cost of goods sold under Specific Identification
Purchase Date	Available for sale			Cost of goods sold			Ending Inventory
	Activity	Units	Unit Cost	Units sold	unit cost	COGS	Ending InventoryUnits	Cost per unit	Ending Inventory Cost
Jan 1	Beginning Inventory	170	$9.50	145	$9.50	$1,377.50	25	$9.50	$237.50
Jan 20	Purchase	120	$8.50	115	$8.50	$977.50	5	$8.50	$42.50
Jan 30	Purchase	240	$8.00	0	$8.00	$0.00	240	$8.00	$1,920.00
		530		260		$2,355.00	270		$2,200.00

Solution 2:

Computation of ending inventory and COGS under Weighted Average Cost (Perpetual)
Date	Goods Purchased		Cost of Goods sold			Inventory Balance
	Units	Cost per unit	Units	Cost per unit	COGS	Units	Cost per unit	Inventory Balance
Jan 1						170	$9.50	$1,615.00
Jan 10			130	$9.50	$1,235.00	40	$9.50	$380.00
Jan 20	120	$8.50				40	$9.50	$380.00
						120	$8.50	$1,020.00
Average Cost						160	$8.75	$1,400.00
Jan 25			130	$8.75	$1,137.50	30	$8.75	$262.50
Jan 30	240	$8.00				30	$8.75	$262.50
						240	$8.00	$1,920.00
Total			260		$2,372.50	270	$8.08	$2,182.50

Solution 3:

Computation of ending inventory and Cost of Goods sold under FIFO (Perpetual)
Date	Goods Purchased		Cost of goods sold			Inventory Balance
	Units	Cost per unit	Units	Cost per unit	COGS	Units	Cost per unit	Inventory Balance
1-Jan						170	$9.50	$1,615.00
10-Jan			130	$9.50	$1,235.00	40	$9.50	$380.00
20-Jan	120	$8.50				40	$9.50	$380.00
						120	$8.50	$1,020.00
25-Jan			40	$9.50	$380.00	30	$8.50	$255.00
			90	$8.50	$765.00
30-Jan	240	$8.00				30	$8.50	$255.00
						240	$8.00	$1,920.00
Total			260		$2,380.00	270		$2,175.00

Solution 4:

Computation of ending inventory and Cost of Goods sold under LIFO (Perpetual)
Date	Goods Purchased		Cost of goods sold			Inventory Balance
	Units	Cost per unit	Units	Cost per unit	COGS	Units	Cost per unit	Inventory Balance
1-Jan						170	$9.50	$1,615.00
10-Jan			130	$9.50	$1,235.00	40	$9.50	$380.00
20-Jan	120	$8.50				40	$9.50	$380.00
						120	$8.50	$1,020.00
25-Jan			120	$8.50	$1,020.00	30	$9.50	$285.00
			10	$9.50	$95.00
30-Jan	240	$8.00				30	$9.50	$285.00
						240	$8.00	$1,920.00
Total			260		$2,350.00	270		$2,205.00