Question

Urban Glam Cosmetics made purchases of lipstick in the current year as follows: Jan. 1 Beginning inventory 81 units @ $ 13.00 = $ 1,053 Mar. 14 Purchased 280 units @ $ 14.00 = 3,920 July 30 Purchased 530 units @ $ 15.00 = 7,950 Units available for sale 891 units Cost of goods available for sale $ 12,923 Urban Glam Cosmetics made sales on the following dates at a selling price of $35 per unit: Jan. 10 73 units Mar. 15 210 units Oct. 5 480 units Total 763 units

Required:

The business uses a perpetual inventory system.

1. Determine the costs that should be assigned to the ending inventory and to goods sold under the following methods. (Do not round intermediate calculations. Round your final answers to 2 decimal places.)


ending inventory Cost of goods sold

FIFO

moving weighted average

Answer 1

Ans. 1	FIFO Perpetual:
		Purchase			Cost of goods sold			Balance
	Date	Quantity	Rate	Total cost	Quantity	Rate	Total cost	Quantity	Rate	Total cost
	1-Jan	81	$13	$1,053				81	$13	$1,053
	10-Jan				73	$13	$949	8	$13	$104
	14-Mar	280	$14	$3,920				8	$13	$104
								280	$14	$3,920
	15-Mar				8	$13	$104
					202	$14	$2,828	78	$14	$1,092
	30-Jul	530	$15	$7,950				78	$14	$1,092
								530	$15	$7,950
	5-Oct				78	$14	$1,092
					402	$15	$6,030	128	$15	$1,920
	Total				Cost of goods sold		$11,003	Cost of Ending inventory		$1,920
	*In FIFO method the units that have purchased first are released the first one.
Ans. 2	Weighted average perpetual:
		Purchase			Cost of goods sold			Balance
	Date	Quantity	Rate	Total cost	Quantity	Rate	Total cost	Quantity	Rate	Total cost
	1-Jan	81	$13	$1,053				81	$13.00	$1,053.00
	10-Jan				73	$13	$949.00	8	$13.00	$104.00
	14-Mar	280	$14	$3,920				288	$13.97	$4,024.00
	15-Mar				210	$14	$2,934.12	78	$13.97	$1,089.88
	30-Jul	530	$15	$7,950				608	$14.87	$9,039.88
	5-Oct				480	$15	$7,136.64	128	$14.87	$1,903.24
	Total				Cost of goods sold		$11,019.76	Cost of Ending inventory		$1,903.24
	*Weighted average rate is calculated by using the formula of (Total available balance / Total units available).