Laker Company reported the following January purchases and sales
data for its only product.
Date | Activities | Units Acquired at Cost | Units sold at Retail | |||||||||||||||
Jan. | 1 | Beginning inventory | 200 | units | @ | $ | 12.50 | = | $ | 2,500 | ||||||||
Jan. | 10 | Sales | 160 | units | @ | $ | 21.50 | |||||||||||
Jan. | 20 | Purchase | 130 | units | @ | $ | 11.50 | = | 1,495 | |||||||||
Jan. | 25 | Sales | 140 | units | @ | $ | 21.50 | |||||||||||
Jan. | 30 | Purchase | 300 | units | @ | $ | 11.00 | = | 3,300 | |||||||||
Totals | 630 | units | $ | 7,295 | 300 | units | ||||||||||||
The Company uses a perpetual inventory system. For specific
identification, ending inventory consists of 330 units, where 300
are from the January 30 purchase, 5 are from the January 20
purchase, and 25 are from beginning inventory.
Required:
1. Complete the table to determine the cost
assigned to ending inventory and cost of goods sold using specific
identification.
2. Determine the cost assigned to ending inventory
and to cost of goods sold using weighted average.
3. Determine the cost assigned to ending inventory
and to cost of goods sold using FIFO.
4. Determine the cost assigned to ending inventory
and to cost of goods sold using LIFO.
Ans. 1 | Specific identification: | ||||||||||
Available for sale | Cost of goods sold | Ending inventory | |||||||||
Purchase date | Activity | Units | Rate | Cost | Units | Rate | Cost | Units | Rate | Cost | |
1-Jan | Beginning inventory | 200 | $12.50 | $2,500 | 175 | $12.50 | $2,188 | 25 | $12.50 | $313 | |
20-Jan | Purchases | 130 | $11.50 | $1,495 | 125 | $11.50 | $1,438 | 5 | $11.50 | $58 | |
30-Jan | Purchases | 300 | $11.00 | $3,300 | 0 | $11.00 | $0 | 300 | $11.00 | $3,300 | |
Total | 630 | $7,295 | Cost of goods sold | $3,625 | Ending inventory | $3,670 | |||||
Sold units = No. of units available on particular date - Ending inventory units on the same date. | |||||||||||
Purchase date | Units available (a) | Ending inventory (b) | Units sold (a - b) | ||||||||
1-Jan | 200 | 25 | 175 | ||||||||
20-Jan | 130 | 5 | 125 | ||||||||
30-Jan | 300 | 300 | 0 | ||||||||
Ans. 2 | Weighted Average (Perpetual) | ||||||||||
Purchase | Cost of goods sold | Balance | |||||||||
Date | Quantity | Rate | Total cost | Quantity | Rate | Total cost | Quantity | Rate | Total cost | ||
1-Jan | 200 | $12.50 | $2,500 | 200 | $12.50 | $2,500 | |||||
10-Jan | 160 | $12.50 | $2,000 | 40 | $12.50 | $500 | |||||
20-Jan | 130 | $11.50 | $1,495 | 170 | $11.74 | 1995 | |||||
25-Jan | 140 | $11.74 | $1,643 | 30 | $11.74 | $352 | |||||
30-Jan | 300 | $11.00 | $3,300 | 330 | $11.07 | $3,652 | |||||
Total | Cost of goods sold | $3,643 | Cost of Ending inventory | $3,652 | |||||||
$7,295 | |||||||||||
*Weighted average rate is calculated by using the formula of (Total available balance / Total units available). | |||||||||||
Ans. 3 | FIFO Perpetual: | ||||||||||
Purchase | Cost of goods sold | Balance | |||||||||
Date | Quantity | Rate | Total cost | Quantity | Rate | Total cost | Quantity | Rate | Total cost | ||
1-Jan | 200 | $12.50 | $2,500 | 200 | $12.50 | $2,500 | |||||
10-Jan | 160 | $12.50 | $2,000 | 40 | $12.50 | $500 | |||||
20-Jan | 130 | $11.50 | $1,495 | 40 | $12.50 | $500 | |||||
130 | $11.50 | $1,495 | |||||||||
25-Jan | 40 | $12.50 | $500 | ||||||||
100 | $11.50 | $1,150 | 30 | $11.50 | $345 | ||||||
30-Jan | 300 | $11.00 | $3,300 | 30 | $11.50 | $345 | |||||
300 | $11.00 | $3,300 | |||||||||
Total | Cost of goods sold | $3,650 | Cost of Ending inventory | $3,645 | |||||||
*In FIFO method the units that have purchased first, are released the first one and the ending inventory | |||||||||||
units remain from the last purchases. | |||||||||||
Ans. 4 | Perpetual LIFO: | ||||||||||
Purchase | Cost of goods sold | Balance | |||||||||
Date | Quantity | Rate | Total cost | Quantity | Rate | Total cost | Quantity | Rate | Total cost | ||
1-Jan | 200 | $12.50 | $2,500 | 200 | $12.50 | $2,500 | |||||
10-Jan | 160 | $12.50 | $2,000 | 40 | $12.50 | $500 | |||||
20-Jan | 130 | $11.50 | $1,495 | 40 | $12.50 | $500 | |||||
130 | $11.50 | $1,495 | |||||||||
25-Jan | 130 | $11.50 | $1,495 | ||||||||
10 | $12.50 | $125 | 30 | $12.50 | $375 | ||||||
30-Jan | 300 | $11.00 | $3,300 | 30 | $12.50 | $375 | |||||
300 | $11.00 | $3,300 | |||||||||
Total | Cost of goods sold | $3,620 | Cost of Ending inventory | $3,675 | |||||||
*In LIFO method the units that have purchased last, are released the first one and the ending inventory | |||||||||||
units remain from the first purchases. |
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