Question

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Laker Company reported the following January purchases and sales data for its only product.

Date		Activities	Units Acquired at Cost								Units sold at Retail
Jan.	1	Beginning inventory	180	units	@	$	7.60	=	$	1,368
Jan.	10	Sales										105	units	@	$	15.60
Jan.	20	Purchase	250	units	@	$	6.60	=		1,650
Jan.	25	Sales										175	units	@	$	15.60
Jan.	30	Purchase	120	units	@	$	5.60	=		672
		Totals	550	units					$	3,690		280	units

Required:

The company uses a perpetual inventory system. For specific identification, ending inventory consists of 270 units, where 120 are from the January 30 purchase, 80 are from the January 20 purchase, and 70 are from beginning inventory. Complete the table to determine the cost assigned to ending inventory and cost of goods sold using specific identification. 2. Determine the cost assigned to ending inventory and to cost of goods sold using weighted average.

Determine the cost assigned to ending inventory and to cost of goods sold using FIFO.

Answer 1

• All working forms part of the answer
• FIFO-Perpetual Method

Date		Activities	Cost of Goods Available for sale			Cost of Goods Sold			Ending Inventory
			Units	rate	Amount	Units	rate	Amount	Units	rate	Amount
Jan.	1	Beginning inventory	180	7.6	1368				180	7.6	1368
Jan.	10	Sales				105	7.6	798	75	7.6	570
Jan.	20	Purchase	250	6.6	1650				75	7.6	570
									250	6.6	1650
Jan.	25	Sales				75	7.6	570	150	6.6	990
						100	6.6	660
Jan.	30	Purchase	120	5.6	672				150	6.6	990
									120	5.6	672
		Totals	550		3690	280		2028	270		1662

Cost of Goods Sold = $2028
Ending Inventory= $1662

• Specific Identification _Perpetual method

Specific Identification	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
Beginning Inventory	180	7.6	1368	110	7.6	836	70	7.6	532
Purchases:
Jan-20	250	6.6	1650	170	6.6	1122	80	6.6	528
Jan-30	120	5.6	672	0	5.6	0	120	5.6	672
TOTAL	550		3690	280		$1958	270		$1732

• Weighted Average – Perpetual

Date		Activities	Cost of Goods Available for sale
			Units	rate	Amount
Jan.	1	Beginning inventory	180	7.6	1368
Jan.	10	Sales
Jan.	20	Purchase	250	6.6	1650
Jan.	25	Sales
Jan.	30	Purchase	120	5.6	672
		Totals	550	$6.71	3690

Weighted Average - $3690 / 550 units =$6.71 per unit

Cost of Goods Sold = 280 units x $6.71 = $ 1878.8

Ending Inventory = 270 units x $6.71 = $1811.7