Question
In: Accounting
Problem 6-2A Express Distribution markets CDs of the performing artist Fishe. At the beginning of October,...
Problem 6-2A
Express Distribution markets CDs of the performing artist Fishe. At the beginning of October, Express had in beginning inventory 4,000 of Fishe’s CDs with a unit cost of $7. During October, Express made the following purchases of Fishe’s CDs. Oct. 3 5,000 @ $8 Oct. 19 6,000 @ $10 Oct. 9 7,000 @ $9 Oct. 25 8,000 @ $11 During October, 21,800 units were sold. Express uses a periodic inventory system.
a) Determine the cost of goods available for sale. Cost of goods available for sale
b) Calculate weighted average cost per unit. (Round answer to 2 decimal places, e.g. 2.25.) Weighted average cost per unit
c) Determine (1) the ending inventory and (2) the cost of goods sold under each of the assumed cost flow methods (FIFO, LIFO, and average-cost).
Please show work!
Solutions
Expert Solution
| Computation of Goods Available for Sale | ||
| Particular | Qty | Amount |
| Beginning Inventory | 4000 | $28,000 |
| Purchase (5000X$8+6000X$10+7000X$9+ 8000X$11) |
26000 | $251,000 |
| Cost of Goods Available for Sale | 30000 | $279,000 |
| ( Computation of Weighted Average Cost per Unit) | ||||||
| Goods Available for Sale | Weighted Average Cost | |||||
| Date | Quantity | Unit Cost | Total Cost | Unit | Unit Cost | Total Cost |
| Opg Bal | 4000 | $7.00 | $28,000 | 4000 | $7.00 | $28,000 |
| 03-Oct | 5000 | $8 | $40,000 | 9000 | $7.56 | $68,000 |
| 09-Oct | 7000 | $9 | $63,000 | 16000 | $8.19 | $131,000 |
| 19-Oct | 6000 | $10 | $60,000 | 22000 | $8.68 | $191,000 |
| 25-Oct | 8000 | 11 | $88,000 | 30000 | $9.30 | $279,000 |
| Hence Weighted Average Unit Cost for ending inventory and cost of Good Sold will be $9.30 | ||||||
| a) Computation of Closing Inventory on FIFO Basis | ||
| Particular | Qty | Amount |
| Beginning Inventory | 4000 | $28,000 |
| Purchase (5000X$8+6000X$10+7000X$9+ 8000X$11) |
26000 | $251,000 |
| Cost of Goods Available for Sale | 30000 | $279,000 |
| Less: Cost of Goods Sold (4000X$7+5000X$8+6000X$10+6800X$9) |
21800 | 189200 |
| Ending Inventory(30000-21800) | 8200 | $89,800 |
| b) Computation of Closing Inventory on LIFO Basis | ||
| Particular | Qty | Amount |
| Beginning Inventory | 4000 | $28,000 |
| Purchase (5000X$8+6000X$10+7000X$9+ 8000X$11) |
26000 | $251,000 |
| Cost of Goods Available for Sale | 30000 | $279,000 |
| Less: Cost of Goods Sold (8000X$11+7000X$9+6000X$10 + 800X$8) |
21800 | 217400 |
| Ending Inventory(30000-21800) | 8200 | $61,600 |
| C) Computation of Closing Inventory on Averag Cost Basis | ||
| Particular | Qty | Amount |
| Beginning Inventory | 4000 | $28,000 |
| Purchase (5000X$8+6000X$10+7000X$9+ 8000X$11) |
26000 | $251,000 |
| Cost of Goods Available for Sale | 30000 | $279,000 |
| Less: Cost of Goods Sold ($279000/30000)X21800 |
21800 | 202740 |
| Ending Inventory(30000-21800) | 8200 | $76,260 |
ekkarill92 answered 1 year agoRelated Solutions
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At the beginning of October, Express had in beginning inventory
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