Question

Specific Identification, FIFO, LIFO, and Weighted-Average

Swing Company's beginning inventory and purchases during the fiscal year ended September 30, 20-2, were as shown.

		Units	Unit Price	Total Cost
October 1, 20-1	Beginning inventory	400	$20.00		$8,000
October 18	1st purchase	530	20.50		10,865
November 25	2nd purchase	190	21.50		4,085
January 12, 20-2	3rd purchase	350	23.00		8,050
March 17	4th purchase	890	24.00		21,360
June 2	5th purchase	840	24.50		20,580
August 21	6th purchase	200	25.50		5,100
September 27	7th purchase	680	26.50		18,020
		4,080			$96,060

Use the following information for the specific identification method.

There are 1,300 units of inventory on hand on September 30, 20-2. Of these 1,300 units:

100 are from October 18, 20-1	1st purchase
200 are from January 12, 20-2	3rd purchase
100 are from March 17	4th purchase
400 are from June 2	5th purchase
200 are from August 21	6th purchase
300 are from September 27	7th purchase

Required:

Calculate the total amount to be assigned to cost of goods sold for the fiscal year ended September 30, 20-2, and ending inventory on September 30, 20-2, under each of the following periodic inventory methods.

	Cost of Goods Sold	Cost of Ending Inventory
1. FIFO	$	$
2. LIFO	$	$
3. Weighted-average (round calculations to two decimal places)	$	$
4. Specific identification	$	$

Answer 1

Total Cost of Inventory purchased = $96,060

Units in Closing Inventory = 1,300 units

FIFO

Cost of Ending Inventory = 680 units from 7th purchase @ $26.50 + 200 units from 6th purchase @ $25.50 + 420 u nits from 5th purchase @ $24.50

Cost of Ending Inventory = (680 * $26.50) + (200 * $25.50) + (420 * $24.50)

= $18,020 + $5,100 + $10,290

= $33,410

Cost of Goods Sold = Total Purchases - Closing Inventory

= $96,060 - $33,410

= $62,650

LIFO

Cost of Ending Inventory = 400 units from opening Inventory @ $20 + 530 units from 1st purchase @ $20.50 + 190 units from 2nd purchase @ $21.50 + 180 units from 3rd purchase @ $23

Cost of Ending Inventory = (400 * $20) + (530 * $20.50) + (190 * $21.50) + (180 * $23)

= $8,000 + $10,865 + $4,085 + $4,140

= $27,090

Cost of Goods Sold = Total Purchases - Closing Inventory

= $96,060 - $27,090

= $68,970

WEIGHTED AVERAGE

Average rate of Inventory Per unit = Total cost of purchases / Number of Units

= $96,060 / 4,080 units

= $23.544

Value of Closing Inventory = 1,300 units @ $23.544 i.e. $30,607.20

Cost of Goods Sold = Total Purchases - Closing Inventory

= $96,060 - $30,607.20

= $65,452.80

SPECIFIC IDENTIFICATION

Value of Closing Inventory = (100 units @ $20.50) + (200 units @ $23) + (100 units @ $24) + (400 units @ $24.50) + (200 units @ $25.50) + (300 units @ $26.50)

Value of closing stock = $2,050 + $4,600 + $2,400 + $9,800 + $5,100 + $7,950

= $31,900

Cost of Goods Sold = Total Purchases - Closing Inventory

= $96,060 - $31,900

= $64,160