Question

In its first month of operations, Literacy for the Illiterate opened a new bookstore and bought merchandise in the following order: (1) 460 units at $5 on January 1, (2) 620 units at $6 on January 8, and (3) 920 units at $7 on January 29.

Assume 1,200 units are on hand at the end of the month, calculate the cost of goods available for sale, ending inventory, and cost of goods sold under the (a) FIFO, (b) LIFO, and (c) weighted average cost flow assumptions. Assume a periodic inventory system is used. (Round "Cost per Unit" to 2 decimal places.)

Answer 1

Methods	Amount of Goods Available for Sale	Ending Inventory	Cost of Goods Sold
FIFO	$          12,460	$                    8,120	$                       4,340
LIFO	$          12,460	$                    6,860	$                       5,600
Weighted average cost	$          12,460	$                    7,476	$                       4,984

--Workings

FIFO	Cost of Goods available for sale			Cost of Goods Sold			Ending Inventory
	Units	Cost/unit	COG for sale	Units sold	Cost/unit	COGS	Units	Cost/unit	Ending inventory
Purchases:
01-Jan	460	$                   5.00	$                        2,300.00	460	$                 5.00	$                 2,300.00	0	$                   5.00	$                         -
08-Jan	620	$                   6.00	$                        3,720.00	340	$                 6.00	$                 2,040.00	280	$                   6.00	$            1,680.00
29-Jan	920	$                   7.00	$                        6,440.00	0	$                 7.00	$                              -	920	$                   7.00	$            6,440.00
TOTAL	2000		$                      12,460.00	800		$                 4,340.00	1200		$            8,120.00
LIFO	Cost of Goods available for sale			Cost of Goods Sold			Ending Inventory
	Units	Cost/unit	COG for sale	Units sold	Cost/unit	COGS	Units	Cost/unit	Ending inventory
Purchases:
01-Jan	460	$                   5.00	$                        2,300.00		$                 5.00	$                              -	460	$                   5.00	$            2,300.00
08-Jan	620	$                   6.00	$                        3,720.00		$                 6.00	$                              -	620	$                   6.00	$            3,720.00
29-Jan	920	$                   7.00	$                        6,440.00	800	$                 7.00	$                 5,600.00	120	$                   7.00	$                840.00
TOTAL	2000		$                      12,460.00	800		$                 5,600.00	1200		$            6,860.00
Average Method	Cost of Goods available for sale			Cost of Goods Sold			Ending Inventory
	Units	Cost/unit	COG for sale	Units sold	Cost/unit	COGS	Units	Cost/unit	Ending inventory
Purchases:	0	$                       -	$                                     -
01-Jan	460	$                  5.00	$                        2,300.00
08-Jan	620	$                   6.00	$                        3,720.00
29-Jan	920	$                   7.00	$                        6,440.00
TOTAL	2000	$                6.230	$                      12,460.00	800	$             6.2300	$                 4,984.00	1200	$              6.2300	$            7,476.00