Question

In: Accounting

Kirtland Corporation uses a periodic inventory system. At the end of the annual accounting period, December...

Kirtland Corporation uses a periodic inventory system. At the end of the annual accounting period, December 31, the accounting records for the most popular item in inventory showed the following:

Transactions Units Unit Cost
Beginning inventory, January 1 310 $6.00
Transactions during the year:
a. Purchase, January 30 210 2.50
b. Purchase, May 1 370 7.00
c. Sale ($8 each) (70)
d. Sale ($8 each) (610)


Required:

a. Compute the amount of goods available for sale.



b. & c. Compute the amount of ending inventory and cost of goods sold at December 31, under Average cost, First-in, first-out, Last-in, first-out and Specific identification inventory costing methods. For Specific identification, assume that the first sale was selected two-fifths from the beginning inventory and three-fifths from the purchase of January 30. Assume that the second sale was selected from the remainder of the beginning inventory, with the balance from the purchase of May 1. (Do not round intermediate calculations. Round "Average Cost and Specific Identification" answers to 2 decimal places.)

Solutions

Expert Solution

a. Amount of goods available for sale: $4975

Working:

No. of Units Unit
Price $
Total $
Beginning inventory, January 1 310 6.00 1860
Purchases:
January 30 210 2.50 525
May 1 370 7.00 2590
Total purchases 580 3115
Goods available for sale 890 4975

b. & c.

Ending Inventory $ Cost of Goods Sold $
Average cost 1173.88 3801.12
First-in, first-out 1470 3505
Last-in, first-out 1260 3715
Specific identification 714 4261

Working:

Average cost Units Total $
Goods available for sale 890 5.59 4975
Sold 680 5.59 3801.124
Ending inventory 210 5.59 1173.876
First-in, first-out
Goods available for sale 890 4975
Sold (70x$6)+(240x$6)+(210x$2.50)+(160x$7) 680 3505
Ending inventory (210x$7) 210 1470
Last-in, first-out
Goods available for sale 890 4975
Sold (70x$7)+(300x$7)+(210x$2.50)+(100x$6) 680 3715
Ending inventory (210x$6) 210 1260
Specific identification
Goods available for sale 890 4975
Sold (28x$6)+(42x$2.50)+(282x$6)+(328x$7) 680 4261
Ending inventory (168x$2.50)+(42x$7) 210 714

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