Question

On August 1st, Verizon Cell Phone Company had a beginning inventory of 40 Samsung Model X phones which it purchased for $150 each.

On August 10th, the company purchases 20 more phones for $155 each. None were sold that week.

On August 15th, the company purchases 30 more phones for $160 each.

Between August 16th and 31st, Horizon sells 70 of the Model X phones.

1.) Calculate Horizon’s Ending Inventory Balance (in dollars) at the end of August and Cost of Goods Sold through August using the FIFO Method. (show all work.)

2.) Calculate Horizon’s Ending Inventory Balance (in dollars) at the end of August and Cost of Goods Sold through August using the LIFO Method. (show all work.)

3.) Calculate Horizon’s Ending Inventory Balance (in dollars) at the end of August and Cost of Goods Sold through August using the Weighted Average Method. (show all work.)

Answer 1

Solution 1:

Computation of COGS and ending inventory - FIFO

	Cost of	goods	available for sale	Cost of	goods	sold	Ending	Inventory
	Nos of units	Unit Cost	Cost of goods available for sale	Nos of units sold	Unit Cost	Cost of goods sold	Nos of units in ending inventory	Unit Cost	Ending inventory
Beginning inventory	40	$150	$6,000	40	$150	$6,000	0	$150	$0.00
Purchases:
Aug 10	20	$155	$3,100	20	$155	$3,100	0	$155	$0.00
Aug 15	30	$160	$4,800	10	$160	$1,600	20	$160	$3,200
Total	90		$13,900	70		$10,700	20		$3,200

Solution 2:

Computation of COGS and ending inventory - LIFO

	Cost of	goods	available for sale	Cost of	goods	sold	Ending	Inventory
	Nos of units	Unit Cost	Cost of goods available for sale	Nos of units sold	Unit Cost	Cost of goods sold	Nos of units in ending inventory	Unit Cost	Ending inventory
Beginning inventory	40	$150	$6,000	20	$150	$3,000	20	$150	$3,000
Purchases:
Aug 10	20	$155	$3,100	20	$155	$3,100	0	$155	$0.00
Aug 15	30	$160	$4,800	30	$160	$4,800	0	$160	$0.00
Total	90		$13,900	70		$10,900	20		$3,000

Solution 3:

Computation of COGS and ending inventory - Weighted Average

	Cost of	goods	available for sale
	Nos of units	Unit Cost	Cost of goods available for sale
Beginning inventory	40	$150	$6,000
Purchases:
Aug 10	20	$155	$3,100
Aug 15	30	$160	$4,800
Total	90		$13,900

Cost of Good sold	(13,900 / 90) * 70	10,811
Ending inventory	(13,900 / 90) * 20	3,089