Question
In: Accounting
From the following? information, calculate the cost of ending inventory and cost of goods sold using...
From the following? information, calculate the cost of ending inventory and cost of goods sold using the? (a) FIFO,? (b) LIFO, and? (c) weighted-average methods.
|
Units |
Cost |
||
|
January 1 |
Beginning Inventory |
4 |
$7 |
|
March 6 |
Purchased |
6 |
2 |
|
August 9 |
Purchased |
4 |
9 |
|
December 10 |
Purchased |
5 |
1 |
The ending inventory reveals eighteight items unsold
Solutions
Expert Solution
Units in inventory = 8 units
Total Items available for sale = Beginning Inventory + All purc. made = 4 + 6 + 4 + 5 = 19 units
Units sold = 19 units - 8 units = 11 units
Answer (a)
Computation of COGS & cost of ending inventory under FIFO :
Under FIFO, out of 11 units sold , 4 units are from beginning Inventory , 6 units from purchase made on March 6 & 1 unit from purchase made on August 9.
Thus ending inventory consists of 3 units from purchase made on August 9 & 5 units from purchase made on December 10
- COGS : (4 * $7) + (6 * $2) +(3* $9) = $28 + $12 + $27 = $67
- Cost of ending inventory : (1* $9) + (5 * $1) = $9 + $5 = $14
Answer (b)
Computation of COGS & cost of ending inventory under LIFO :
Under LIFO, out of 11 units sold , 5 units from purchase made on December 10, 4 units from purchase made on August 9 & 2 units from purchase made on March 6.
Thus ending inventory consists of 4 units from purchase made on March 6. & 4 units from beginning Inventory
- COGS : (5 * $1) + (4 * $9) +(2* $2) = $5 + $36 +$4 = $45
- Cost of ending inventory : (4* $2) + (4 * $7) = $8 +$28 = $36
Answer (c)
Computation of COGS & cost of ending inventory under weighted-average methods :
Average cost per unit = Total cost of inventory / Total units available for sale = $81 / 19 units = $4.26
- COGS = 11 units * $4.26316 = $46.86 or $47
- Cost of ending inventory = 8 units * $4.26 = $34.08 or $34
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13
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14
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19
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33
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Cost of ending inventory
$
Cost of goods sold
$
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Purchases
Cost of
Goods Sold
Balance
Date
Units
Cost
Total
Units
Cost
Total
Units
Cost
Total
Units
Total Cost
WA Cost Per unit
Apr-01
Beginning Inventory
26
$11
$286
26
$11
$286
Apr-15
52
$13
$676
$
$
26
$286
52
$676
$
$
Apr-20
29...
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