Question

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Warnerwoods Company uses a perpetual inventory system. It entered into the following purchases and sales transactions for March.

Date

Activities

Units Acquired at Cost

Units Sold at Retail

Mar.

1

Beginning inventory

230

units

@ $53.60 per unit

Mar.

5

Purchase

290

units

@ $58.60 per unit

Mar.

9

Sales

390

units

@ $88.60 per unit

Mar.

18

Purchase

150

units

@ $63.60 per unit

Mar.

25

Purchase

280

units

@ $65.60 per unit

Mar.

29

Sales

260

units

@ $98.60 per unit

Totals

950

units

650

units

3. Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO, (c) weighted average, and (d) specific identification. For specific identification, the March 9 sale consisted of 130 units from beginning inventory and 260 units from the March 5 purchase; the March 29 sale consisted of 110 units from the March 18 purchase and 150 units from the March 25 purchase.

Answer 1

Solution 3a:

Computation of ending inventory COGS under FIFO - Warnerwoods Co
Date	Beginning Inventory			Purchase			Cost of Goods Sold			Ending Inventory
	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount
1-Mar	230	$53.60	$12,328.00	0	$0.00	$0.00	0	$0.00	$0.00	230	$53.60	$12,328.00
5-Mar	230	$53.60	$12,328.00	290	$58.60	$16,994.00	0	$0.00	$0.00	230	$53.60	$12,328.00
										290	$58.60	$16,994.00
9-Mar	230	$53.60	$12,328.00	0	$0.00	$0.00	230	$53.60	$12,328.00	130	$58.60	$7,618.00
	290	$58.60	$16,994.00				160	$58.60	$9,376.00
18-Mar	130	$58.60	$7,618.00	150	$63.60	$9,540.00	0	$0.00	$0.00	130	$58.60	$7,618.00
										150	$63.60	$9,540.00
25-Mar	130	$58.60	$7,618.00	280	$65.60	$18,368.00	0	$0.00	$0.00	130	$58.60	$7,618.00
	150	$63.60	$9,540.00							150	$63.60	$9,540.00
										280	$65.60	$18,368.00
29-Mar	130	$58.60	$7,618.00	0	$0.00	$0.00	130	$58.60	$7,618.00	20	$63.60	$1,272.00
	150	$63.60	$9,540.00				130	$63.60	$8,268.00	280	$65.60	$18,368.00
	280	$65.60	$18,368.00
Total							650		$37,590.00	300		$19,640.00

Solution 3b:

Computation of ending inventory COGS under LIFO - Warnerwoods Co
Date	Beginning Inventory			Purchase			Cost of Goods Sold			Ending Inventory
	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount
1-Mar	230	$53.60	$12,328.00	0	$0.00	$0.00	0	$0.00	$0.00	230	$53.60	$12,328.00
5-Mar	230	$53.60	$12,328.00	290	$58.60	$16,994.00	0	$0.00	$0.00	230	$53.60	$12,328.00
										290	$58.60	$16,994.00
9-Mar	230	$53.60	$12,328.00	0	$0.00	$0.00	290	$58.60	$16,994.00	130	$53.60	$6,968.00
	290	$58.60	$16,994.00				100	$53.60	$5,360.00
18-Mar	130	$53.60	$6,968.00	150	$63.60	$9,540.00	0	$0.00	$0.00	130	$53.60	$6,968.00
										150	$63.60	$9,540.00
25-Mar	130	$53.60	$6,968.00	280	$65.60	$18,368.00	0	$0.00	$0.00	130	$53.60	$6,968.00
	150	$63.60	$9,540.00							150	$63.60	$9,540.00
										280	$65.60	$18,368.00
29-Mar	130	$53.60	$6,968.00	0	$0.00	$0.00	260	$65.60	$17,056.00	130	$53.60	$6,968.00
	150	$63.60	$9,540.00							150	$63.60	$9,540.00
	280	$65.60	$18,368.00							20	$65.60	$1,312.00
Total							650		$39,410.00	300		$17,820.00

Solution 3c:

Computation of ending inventory COGS under Weighted Average Cost - Warnerwoods Company
Date	Beginning Inventory			Purchase			Cost of Goods Sold			Ending Inventory
	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount
1-Mar	230	$53.60	$12,328	0	$0.00	$0	0	$0.00	$0	230	$53.60	$12,328
5-Mar	230	$53.60	$12,328	290	$58.60	$16,994	0	$0.00	$0	520	$56.39	$29,322
9-Mar	520	$56.39	$29,322	0	$0.00	$0	390	$56.39	$21,992	130	$56.39	$7,331
18-Mar	130	$56.39	$7,331	150	$63.60	$9,540	0	$0.00	$0	280	$60.25	$16,871
25-Mar	280	$60.25	$16,871	280	$65.60	$18,368	0	$0.00	$0	560	$62.93	$35,239
29-Mar	560	$62.93	$35,239	0	$0.00	$0	260	$62.93	$16,361	300	$62.93	$18,878
Total							650		$38,352	300		$18,878

Solution 3d:

Computation of COGS and ending inventory - Specific identification
Particulars	Cost of goods available for sale			Cost of goods sold			Ending Inventory
	Nos of units	Unit Cost	Cost of goods available for sale	Nos of units sold	Unit Cost	Cost of goods sold	Nos of units in ending inventory	Unit Cost	Ending inventory
Beginning inventory	230	$53.60	$12,328	130	$53.60	$6,968.00	100	$53.60	$5,360.00
Purchases:
5-Mar	290	$58.60	$16,994	260	$58.60	$15,236.00	30	$58.60	$1,758.00
18-Mar	150	$63.60	$9,540	110	$63.60	$6,996.00	40	$63.60	$2,544.00
25-Mar	280	$65.60	$18,368	150	$65.60	$9,840.00	130	$65.60	$8,528.00
Total	950		$57,230	650		$39,040.00	300		$18,190.00