Question

Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO, (c) weighted average, and (d) specific identification.

Warnerwoods Company uses a perpetual inventory system. It entered into the following purchases and sales transactions for March.

Date

Activities

Units Acquired at Cost

Units Sold at Retail

Mar.

1

Beginning inventory

210

units

@ $53.20 per unit

Mar.

5

Purchase

280

units

@ $58.20 per unit

Mar.

9

Sales

370

units

@ $88.20 per unit

Mar.

18

Purchase

140

units

@ $63.20 per unit

Mar.

25

Purchase

260

units

@ $65.20 per unit

Mar.

29

Sales

240

units

@ $98.20 per unit

Totals

890

units

610

units

3. Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO, (c) weighted average, and (d) specific identification. For specific identification, the March 9 sale consisted of 120 units from beginning inventory and 250 units from the March 5 purchase; the March 29 sale consisted of 100 units from the March 18 purchase and 140 units from the March 25 purchase.

Answer 1

Warnerwoods Company Perpetual Inventory System Inventory sheet - FIFO Cost of goods available for sale Date Quantity Cost per unit Total cost 1-Mar 5-Mar 280 $ 58.20 16,296.00 Cost of goods sold Cost per unit Total cost Quantity Ending Inventory Quantity Cost per unit Total cost 210 $ 53.20 11,172.00 210 $ 53.20 11,172.00 280 $ 58.20 16,296.00 9-Mar 210 160 $ $ 53.20 58.20 11,172.00 9,312.00 18-Mar 140 $ 63.20 8,848.00 25-Mar 260 $ 65.20 16,952.00 120 120 140 120 140 260 20 260 280 $ $ $ $ $ $ $ $ 58.20 58.20 63.20 58.20 63.20 65.20 63.20 65.20 6,984.00 6,984.00 8,848.00 6,984.00 8,848.00 16,952.00 1,264.00 16,952.00 29-Mar 120 120 610 $ $ 58.20 63.20 6,984.00 7,584.00 35,052.00 31-Mar 680 42,096.00 18,216.00 Inventory sheet - LIFO Cost of goods available for sale Date Quantity Cost per unit Total cost 1-Mar 5-Mar 280 $ 58.20 16,296.00 Cost of goods sold Cost per unit Total cost Quantity Ending Inventory Quantity Cost per unit Total cost 210 $ 53.20 11,172.00 210 $ 53.20 11,172.00 280 $ 58.20 16,296.00 120 $ 53.20 6,384.00 9-Mar 280 90 $ $ 58.20 53.20 16,296.00 4,788.00 18-Mar 140 $ 63.20 8,848.00 25-Mar 260 $ 65.20 16,952.00 120 140 120 140 260 120 140 20 280 $ $ $ $ $ $ $ $ 53.20 63.20 53.20 63.20 65.20 53.20 63.20 65.20 6,384.00 8,848.00 6,384.00 8,848.00 16,952.00 6,384.00 8,848.00 1,304.00 16,536.00 29-Mar 240 $ 65.20 15,648.00 31-Mar 680 42,096.00 610 36,732.00 Inventory sheet - Average weighted cost Goods Purchased Date Quantity Cost per unit Total cost 1-Mar 5-Mar 280 $ 58.20 16,296.00 Cost of goods sold Cost per unit Total cost Quantity Calculation -27,468/490=56.06 per unit 370 $ 56.06 20,741.14 9-Mar 18-Mar 140 $ 63.20 8,848.00 Ending Inventory Quantity Cost per unit Total cost 210 $ 53.20 11,172.00 210 $ 53.20 11,172.00 280 $ 58.20 16,296.00 56.06 27,468.00 120 $ 56.06 6,726.86 120 $ 56.06 6,726.86 140 $ 63.20 8,848.00 260 $ 59.90 15,574.86 260 $ 59.90 15,574.86 260 $ 65.20 16,952.00 520 $ 62.55 32,526.86 2 80 $ 62.55 17,514.46 280 17,514.46 =15,574.86/260=59.90 per unit 25-Mar 260 $ 65.20 16,952.00 =32,526.86/520=62.55 per unit $ 62.55 29-Mar 31-Mar 240 610 15,012.40 35,753.54 680 42,096.00 Inventory sheet - Specific identification Goods Purchased Date Quantity Cost per unit Total cost 1-Mar 5-Mar 280 $ 58.20 16,296.00 Cost of goods sold Cost per unit Total cost Quantity 9-Mar 120 250 $ $ 53.20 58.20 6,384.00 14,550.00 18-Mar 140 $ 63.20 8,848.00 Ending Inventory Quantity Cost per unit Total cost 210 $ 53.20 11,172.00 210 $ 53.20 11,172.00 280 $ 58.20 16,296.00 90 $ 53.20 4,788.00 30 $ 58.20 1,746.00 90 $ 53.20 4,788.00 30 $ 58.20 1,746.00 140 $ 63.20 8,848.00 90 $ 53.20 4,788.00 30 $ 58.20 1,746.00 140 $ 63.20 8,848.00 260 $ 65.20 16,952.00 90 $ 53.20 4,788.00 30 $ 58.20 1,746.00 40 $ 63.20 2,528.00 120 $ 65.20 7,824.00 280 16,886.00 25-Mar 260 $ 65.20 16,952.00 29-Mar 100 140 $ $ 63.20 65.20 6,320.00 9,128.00 31-Mar 31-Mar 680 680 42,096.00 42,096.00 610 36,382.00