Question

Semester Case - Cowboy Ice Cream, Inc. As CIC considers expanding by adding a fixed location, W.1. realizes that budgeting properly for inventory is more important than ever. As you know from prior work, the wholesale division of CIC began January with 1.250 units of inventory at a cost of $4.00 per unit. During the first six months of the current year, CIC recorded the following transactions related to inventory for the wholesale division: Sales (units) Month Beginning inventory January February March April May June Totals 1.500 1,600 1.750 3,100 4,500 4.800 17.250 Purchases Price Ea. 1.250 $4.00 1.000 $4.50 1.200 $4.60 1,700 $4.40 2.900 $4.75 5,000 $4.85 4,500 $4.90 17,550 Total $5,000 $4,500 $5.520 $7.480 $13.775 $24.250 $22.050 $82,575 Relative to June, the company projects a 3 percent increase in cost of goods sold during July The desired ending inventory balance for July is $2.500. CIC pays cash to settle 60 percent of its purchases on account during the month of purchase and pays the remaining 40 percent in the month following the purchase. The accounts payable balance as of June 30 was $8.820. What is ending inventory, in dollars and units, at June 308 CIC applies the FIFO cost flow assumption.

Answer 1

(A)Closing balance of Inventory as on June 30

Month	Op.Balance(Units)	Purchase	Price($)	Total($)	Units Sold	Price($)	Total($)	Balance Units	price($)	Total($)
Beg.Jan.	1250		4	5000
January	1250	1000	4.50	4500	1250	4	5000	750	4.50	3375
					250	4.50	1125
February	750	1200	4.60	5520	750	4.50	3375	350	4.60	1610
					850	4.60	3910
March	350	1700	4.40	7480	350	4.60	1610	300	4.40	1320
					1400	4.40	6160
April	300	2900	4.75	13775	300	4.40	1320	100	4.75	475
					2800	4.75	13300
May	100	5000	4.85	24250	100	4.75	475	600	4.85	2910
					4400	4.85	21340
June	600	4500	4.90	22050	600	4.85	2910	300	4.90	1470
					4200	4.90	20580

Note:

Above calculation is done on basis of FIFO method.i.e.First opening balance unites are sold then out of units purchased during the month.

Hence,300 units are balance of June 30 at $4.90,Total cost of balance $1470.

(B)Cost of Goods Sold each Month & Total

Month	Cost of Goods Sold
January	6125
February	7285
March	7770
April	14620
May	21815
June	23490
Total	81105