Question
In: Accounting
Problem 2. Given the following information, determine the cost of ending inventory at December 31: December...
Problem 2. Given the following information, determine the cost of ending inventory at December 31:
December 2: 5 units were purchased at $7 per unit.
December 9: 10 units were purchased at $9.40 per unit.
December 11: 12 units were sold at $35 per unit
December 15: 20 units were purchased at $10.15 per unit
December 22: 18 units were sold at $35 per unit
Use the above information for parts a, b and c.
a> (14 points) Use the LIFO , Last In First Out, inventory flow and perpetual inventory method to value the ending inventory. SHOW YOUR WORK
b> (14 points) Use the FIFO, First In First Out, inventory flow and perpetual inventory method to value the ending inventory. SHOW YOUR WORK
c> (14 points) Use the weighted average inventory flow and perpetual inventory method to value the ending inventory. SHOW YOUR WORK
Solutions
Expert Solution
Answer :
(a) Computation of value of inventory as per LIFO method
= 3 unit* $ 7 + 2 unit* $10.15
= $ 41.30
Working note -1
Ending inventory in unit = Purchase in unit - Sales in unit
= ( 5 + 10 +20) - ( 12+ 18)
= 5 unit
| Date | purchase | sales | Balance |
| Dec 2 | 5 unit * $ 7 | 5 unit * $ 7 | |
| Dec 9 | 10 unit* $ 9.40 | 5 unit * $ 7 | |
| 10 unit* $ 9.40 | |||
| Dec 11 | 12 unit | 3 unit* $ 7 | |
| Dec 15 | 20 unit * $ 10.15 | 3 unit* $ 7 | |
| 20 unit * $ 10.15 | |||
| Dec 22 | 18 unit | 3 unit* $ 7 | |
| 2 unit* $10.15 |
(b) Computation of value of inventory as per FIFO method
= 5 unit* $ 10.15
= $ 50.75
Working note -1
Ending inventory in unit = Purchase in unit - Sales in unit
= ( 5 + 10 +20) - ( 12+ 18)
= 5 unit
| Date | purchase | sales | Balance |
| Dec 2 | 5 unit * $ 7 | 5 unit * $ 7 | |
| Dec 9 | 10 unit* $ 9.40 | 5 unit * $ 7 | |
| 10 unit* $ 9.40 | |||
| Dec 11 | 12 unit | 3 unit* $ 9.40 | |
| Dec 15 | 20 unit * $ 10.15 | 3 unit* $ 9.40 | |
| 20 unit * $ 10.15 | |||
| Dec 22 | 18 unit | 5 unit* $ 10.15 | |
(c) Computation of value of inventory as per Weighted average method
= 5 unit* $ 9.95 ( Approx to 2 decimal place)
= $ 49.75
| Date | purchase | sales | Total cost | Balance unit | Average rate |
| Dec 2 | 5 unit * $ 7 | $ 35 | 5 unit | $ 7 | |
| Dec 9 | 10 unit* $ 9.40 |
$ 35+ $ 94 =$ 129 |
15 unit | $ 8.60 | |
| Dec 11 | 12 unit | 3 unit | $ 8.60 | ||
| Dec 15 | 20 unit * $ 10.15 | 20 unit * $ 10.15 + 3*$8.60 = 228.80 | 23 | $ 9.95 | |
| Dec 22 | 18 unit | 5 unit | $ 9.95 | ||
ekkarill92 answered 8 months agoRelated Solutions
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work.)
Dec. 1 Beginning inventory 1,000 units @ $7
Dec. 5 Purchased 3,000 units @ $7.10
Dec. 18 Purchased 4,000 units @ $7.15
Dec. 24 Purchased 2,000 units @ $7.20
Dec. 31 Ending inventory 2,500 units
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Beginning
Ending
Finished Goods Inventory
99,500
122,500
Sales
1,750,000
Work In Process Inventory
22,000
23,500
Property Taxes (Factory)
24,000
Factory Utilities
32,000
Direct Material Used
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Amortization (80 % Factory)
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Direct Manufacturing Labour
400,500
Selling and Admin Expense
120,250
InDirect Manufacturing Labour
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Admin Salaries
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calculate the company's ending inventory, cost of goods sold and
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assuming the company uses a periodic inventory system: (Note: The
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to rounding.)
2011
Units
Unit Cost
Total Cost
Jan
1
Beginning
Inventory
14
$
60
$
840
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March
28
Purchase
20
66
1,320
Aug
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Purchase
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March 29: sale of 30 units @ $19.50 per unit
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Under LIFO Perpetual
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
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Cost
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Beginning Inventory
4
$7
March 6
Purchased
6
2
August 9
Purchased
4
9
December 10
Purchased
5
1
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Inventory, December 31
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Freight-in
1,100
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Purchases
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$15,200
$15,100
$15,000
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GGS acquired an additional 10,000 cash from the issuance of
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GGS purchased $90,000 of...
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