Question

Find cost goods sold & ending inventory for FIFO, LIFO, Average Cost

DATE ACTIVITY es and sale s Aibor Red is one of its most popular les of Arbor Red for the month of January, Redwyne Jan. 01 Beginning Inventory UNS ACOUIREDCOSTUNITS SOLD RETAIL UNITS ACOL 56.00 Jan. 10 Sales Jan. 20 Purchase Jan. 25 Sales Jan. 30 Purchase 60 55.00 100 $15.00 Instructions: 180 @ $4.50 80 @ $15.00

Answer 1

140 Perpetual inventory System: In this system, the cost of sales and invenries are updated on every sales and purchase transactions. Ans 1: First in, first out method (FIFO): In this method it is assumed that inventory which is purchased first will be sold first and the inventory will consist of recent purchases. Purchase Cost of Merchandise Sold inventory Date Unit Rate Total Unit Rate Total Unit Rate Total Jan 1 $6.00 $840.00 Jan 10 100 $6.00 $600.00 $6.00 $240.00 Jan 20 $5.00 $300.00 $6.00 $240.00 $5.00 $300.00 $540.00 Jan 25 $240.00 $5.00 $100.00 $5.00 $200.00 $440.00 $100.00 Jan 30 180 $4.50 $810.00 $5.00 $100.00 $4.50 $810.00 200 $910.00 240 $1,110.00 180 $1,040.00 $910.00 $6.00 200 Cost of Good Sold Ending Inventory $1,040.00 $910.00

00 40 Ans 2: Last in, first out method (LIFO): In this method it is assumed that inventory which is purchased last will be sold first and the inventory will consist of old purchases. Purchase Cost of Merchandise Sold Date inventory Unit Rate Total Unit Rate Total Unit Rate Total Jan 1 140 $6.00 $840.00 Jan 10 100 $6.00 $600.00 $6.00 $240.00 Jan 20 60 $5.00 $300.00 $5.00 $300.00 $6.00 $240.00 100 $540.00 Jan 25 60 $5.00 $300.00 20 $6.00 $120.00 20 $6.00 $120.00 80 $420.00 20 $120.00 Jan 30 180 $4.50 $810.00 $6.00 $120.00 $4.50 $810.00 $930.00 $1,110.00 | $1,020.00 200 $930.00 180 200 240 Cost of Good Sold Ending Inventory $1,020.00 $930.00

Ans 3: In weighted average cost method per unit purchase is derived by adding cost opening inventory and purchase made during the year and then dividing it by the adding the units of opening inventory and units purchased during the year Purchase Cost of Merchandise Sold inventory Date Unit Rate Total Unit Rate Total Unit Rate Total Jan 1 140 $6.00 $840.00 Jan 10 100 $6.00 $600.00 $6.00 $240.00 401 Average $6.00 $240.00 Jan 20 601 $5.00 $300.00 $6.00 $5.00 $5.40 $240.00 $300.00 $540.00 80 $5.40 $432.00 Jan 25 Average NINIS $5.40 $108.00 $108.00 $5.40 $5.40 Jan 30 1 1 80 $4.50 $810.00 $4.50 180 200 200 $108.00 $810.00 $918.00 $4.59 240 $1,110.00 180 $1,032.00 $918.00 Cost of Good Sold Ending Inventory $1,032.00 $918.00