Question

Problem 6-7AA Periodic: Alternative cost flows LO P3 Seminole Company began year 2017 with 28,000 units of product in its January 1 inventory costing $16.60 each. It made successive purchases of its product in year 2017 as follows. The company uses a periodic inventory system. On December 31, 2017, a physical count reveals that 51,000 units of its product remain in inventory. Mar. 7 44,000 units@ $19.60 each May 25 46,000 units @ $23.60 each Aug. 1 36,000 units @ $25.60 each Nov. 1O 41,000 units @ $28.60 each Required: 1. Compute the number and total cost of the units available for sale in year 2017. 2. Compute the amounts assigned to the 2017 ending inventory and the cost of goods sold using (a) FIFO, (b) LIFO, and (c) weighted average. Complete this questions by entering your answers in the tabs below. Required 1 \: Required 2 I Compute the number and total cost of the units available for sale in year 2017. I Total units available for sale !units Total cost of units available for sale I Requirement 2: Compute the amounts assigned to the 2017 ending inventory and the cost of goods sold using (a) FIFO, (b) LIFO, AND (c) weight average. (Round per unit costs to three decimals. But inventory balances to the dollar).

Answer 1

Answer 1.

Cost of Beginning Inventory = 28,000 * $16.60
Cost of Beginning Inventory = $464,800

Cost of Goods Purchased = 44,000 * $19.60 + 46,000 * $23.60 + 36,000 * $25.60 + 41,000 * $28.60
Cost of Goods Purchased = $4,042,200

Cost of Goods Available for Sale = Cost of Beginning Inventory + Cost of Goods Purchased
Cost of Goods Available for Sale = $464,800 + $4,042,200
Cost of Goods Available for Sale = $4,507,000

Number of Units Available for Sale = 28,000 + 44,000 + 46,000 + 36,000 + 41,000
Number of Units Available for Sale = 195,000

Number of Units in Ending Inventory = 51,000

Number of Units Sold = Number of Units Available for Sale - Number of Units in Ending Inventory
Number of Units Sold = 195,000 - 51,000
Number of Units Sold = 144,000

Answer 2.

FIFO:

Cost of Goods Sold = 28,000 * $16.60 + 44,000 * $19.60 + 46,000 * $23.60 + 26,000 * $25.60
Cost of Goods Sold = $3,078,400

Cost of Ending Inventory = Cost of Goods Available for Sale - Cost of Goods Sold
Cost of Ending Inventory = $4,507,000 - $3,078,400
Cost of Ending Inventory = $1,428,600

LIFO:

Cost of Goods Sold = 41,000 * $28.60 + 36,000 * $25.60 + 46,000 * $23.60 + 21,000 * $19.60
Cost of Goods Sold = $3,591,400

Cost of Ending Inventory = Cost of Goods Available for Sale - Cost of Goods Sold
Cost of Ending Inventory = $4,507,000 - $3,591,400
Cost of Ending Inventory = $915,600

Weighted Average:

Cost per unit = Cost of Goods Available for Sale / Number of Units Available for Sale
Cost per unit = $4,507,000 / 195,000
Cost per unit = $23.113

Cost of Goods Sold = 144,000 * $23.113
Cost of Goods Sold = $3,328,272

Cost of Ending Inventory = Cost of Goods Available for Sale - Cost of Goods Sold
Cost of Ending Inventory = $4,507,000 - $3,328,272
Cost of Ending Inventory = $1,178,728