Question

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!

Answer 1

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