Question

Oahu Kiki tracks the number of units purchased and sold throughout each accounting period but applies its inventory costing method at the end of each month, as if it uses a periodic inventory system. Assume Oahu Kiki's records show the following for the month of January Sales totaled 320 units

Oahu Kiki tracks the number of units purchased and sold throughout each accounting period but applies its inventory costing method at the end of each month, as if it uses a periodic inventory system. Assume Oahu Kiki's records show the following for the month of January. Sales totaled 320 units. Beginning Inventory Purchase Purchase Date January 1 January 15 January 24 Units Unit Cost 260 $ 85 420 9 5 220 115 Total Cost $22,100 39.900 25,300 Required: 1. Calculate the number and cost of goods available for sale. 2. Calculate the number of units in ending inventory. 3. Calculate the cost of ending inventory and cost of goods sold using the (a) FIFO, (D) LIFO, and (c) weighted average cost methods.

Answer 1

Ans. 1	Number of goods available for sale	900 units
	Cost of goods available for sale	$87,300
	*Calculations:
		Cost of goods available for sale
		Units	Cost per unit	Total cost
	Beginning inventory, Jan.1	260	$85.00	$22,100
	Purchases:
	15-Jan	420	$95.00	$39,900
	24-Jan	220	$115.00	$25,300
	Total available for sale	900		$87,300
Ans. 2	Ending inventory units = Number of units available for sale - Total units sold
	900 - 320
	580 units
Ans. 3		Cost of Ending	Cost of Goods
		Inventory	Sold
	FIFO	$59,500	$27,800
	LIFO	$52,500	$34,800
	Weighted Average Cost	$56,260	$31,040
	*Calculations:
	FIFO:	Cost of goods available for sale			Cost of goods sold - Periodic FIFO			Ending inventory - Periodic FIFO
		Units	Rate	Total	Units	Rate	Total	Units	Rate	Total
	Beginning inventory, Jan.1	260	$85.00	$22,100	260	$85.00	$22,100	0	$85.00	$0
	Purchases:
	15-Jan	420	$95.00	$39,900	60	$95.00	$5,700	360	$95.00	$34,200
	24-Jan	220	$115.00	$25,300		$115.00		220	$115.00	$25,300
	Total available for sale	900		$87,300	320		$27,800	580		$59,500
	*In FIFO method the units that have purchased first, are released the first one and the ending inventory
	units remain from the last purchases.
	LIFO:	Cost of goods available for sale			Cost of goods sold - Periodic LIFO			Ending inventory - Periodic LIFO
		Units	Rate	Total	Units	Rate	Total	Units	Rate	Total
	Beginning inventory, Jan.1	260	$85.00	$22,100	0	$85.00	$0	260	$85.00	$22,100
	Purchases:
	15-Jan	420	$95.00	$39,900	100	$95.00	$9,500	320	$95.00	$30,400
	24-Jan	220	$115.00	$25,300	220	$115.00	$25,300	0	$115.00	$0
	Total available for sale	900		$87,300	320		$34,800	580		$52,500
	*In LIFO method the units that have purchased last, are released the first one and ending inventory units
	remain from the first purchase.
	Average cost:	Cost of goods available for sale			Cost of goods sold - Periodic Average cost			Ending inventory - Periodic Average cost
		Units	Rate	Total	Units	Rate	Total	Units	Rate	Total
	Beginning inventory, Jan.1	260	$85.00	$22,100
	Purchases:
	15-Jan	420	$95.00	$39,900
	24-Jan	220	$115.00	$25,300
	Total available for sale	900		$87,300	320	$97.00	$31,040	580	$97.00	$56,260
	Average cost per unit =   Total cost of goods available for sale / Units available for sale
	$87,300 / 900
	$97.00	per unit