Question

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7/31/2019 Reporting and Analyzing Inventory BE6-13 Apply periodic FIFO and average cost. (LO 6) In its first month of operations, Queensland Inc. made three purchases of merchandise in the following sequence: (1)370 units at $9 each, (2) 700 units at $12 each, and (3) 800 units at $11 each. A physical inventory count determined that there were 600 units on hand at the end of the month. Assuming Queensland uses a periodic inventory system, calculate the cost of the ending inventory and cost of goods sold using (a) FIFO and (b) average cost. (For average cost, use unrounded numbers in your calculations but round to the nearest cent for presentation purposes in your answer.)

Answer 1

Correct Answer:

	FIFO	Weighted Average
Cost of Goods Sold	$ 13,930	$ 13,943
Ending Inventory	$6,600	$ 6,587

Working:

Cost of Goods Available for sale
		Units	Cost per unit	value
Beginning Inventory	1	370	$                       9.00	$                   3,330.00
Purchases	2	700	$                     12.00	$                   8,400.00
Purchases	3	800	$                     11.00	$                   8,800.00
Total		1870		$                 20,530.00

Weighted Average Cost Per unit
Units		(A)	1870
Total Cost		(B)	$            20,530.00
Average Cost		(C=B/A)	$                10.9786

FIFO
A	Total Units Available for sale			1870		$    20,530.00
	Units Sold			1270
	Ending Inventory Units			600
	Valuation
	Cost of Goods Sold		370		$                           9.00	$      3,330.00
			700		$                         12.00	$      8,400.00
			200		$                         11.00	$      2,200.00
B	Total Cost of Goods Sold		1270	units		$    13,930.00
A-B	Ending Inventory		600	units		$      6,600.00

	Weighted Average
A	Total Units Available for sale			1870		$    20,530.00
	Units Sold			1270
	Ending Inventory Units			600
	Valuation
	Cost of Goods Sold		1270		$                    10.9786	$    13,942.83
B	Total Cost of Goods Sold		1270	units		$          13,943
A-B	Ending Inventory		600	units		$            6,587

End of answer.

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