Question

Skysong, Inc. reports the following for the month of June.

Date		Explanation		Units		Unit Cost			Total Cost
June 1		Inventory		250		$8			$2,000
12		Purchase		500		9			4,500
23		Purchase		375		10			3,750
30		Inventory		125

Assume a sale of 550 units occurred on June 15 for a selling price of $11 and a sale of 450 units on June 27 for $12.

Calculate the cost of the ending inventory and the cost of goods sold for each cost flow assumption, using a perpetual inventory system. (Round average-cost per unit to 3 decimal places, e.g. 12.520 and final answer to 0 decimal places, e.g. 1,252.)

		FIFO		LIFO		Moving-Average Cost
The cost ending inventory		$		$		$
The cost of goods sold		$		$		$

Please leave a coment of how do you get the results. Thanks

Answer 1

Under FIFO method, units sold consists of units from earliest purchases.

June 15 sales consists of 250 units from beginning inventory and 300 units from June 12 purchases. June 27 sales consists of 200 units from June 12 purchases and 250 units from June 23 purchases.

Cost of goods sold = (250*$8) + (300*$9) + (200*$9) + (250*$10)

= $9,000

Under LIFO method, units sold consists of units from recent purchases.

June 15 sales consists of 500 units from June 12 purchases and 50 units from beginning inventory. June 27 sales consists of 375 units from June 23 purchases and 75 units from beginning inventory.

Cost of goods sold = (500*$9) + (50*$8) + (375*$10) + (75*$8)

= $9,250

June 15 cost per unit = ($4,500+$2,000) / (500+250) = $8.667

June 15 cost of goods sold = 550*$8.667 = $4,767

June 27 cost per unit = ($3,750+$4,500+$2,000-$4,767) / (375+500+250-550)

= $9.536

June 27 cost of goods sold = 450*$9.536 = $4,291

Cost of goods sold = $4,767+$4,291 = $9,058

Cost of goods available for sale = $2,000+$4,500+$3,750 = $10,250

Ending inventory = Cost of goods available for sale - Cost of goods sold

		FIFO		LIFO		Moving-Average Cost
The cost ending inventory		$1,250 ($10,250-$9,000)		$1,000 ($10,250-$9,250)		$1,192 ($10,250-$9,058)
The cost of goods sold		$9,000		$9,250		$9,058