Question

Brane Distribution markets CDs of the performing artist Unique. At the beginning of October, Brane had in beginning inventory 2,000 of Unique’s CDs with a unit cost of $5. During October, Brane made the following purchases of Unique’s CDs. Oct. 3 2,500 @ $6 Oct. 19 3,000 @ $8 Oct. 9 3,500 @ $7 Oct. 25 4,000 @ $9 During October, 10,900 units were sold. Crane uses a periodic inventory system.

(a)

(b1)

(b2) Your answer is incorrect. Try again. Determine (1) the ending inventory and (2) the cost of goods sold under each of the assumed cost flow methods (FIFO, LIFO, and average-cost). (Round answers to 0 decimal places, e.g. 1,250.) FIFO LIFO AVERAGE-COST The ending inventory $ $ $ The cost of goods sold $ $ $

Answer 1

Determine (1) the ending inventory and (2) the cost of goods sold under each of the assumed cost flow methods (FIFO, LIFO, and average-cost). (Round answers to 0 decimal places, e.g. 1,250.)

		FIFO		LIFO		AVERAGE-COST
The ending inventory		$36800		$22600		$29930
The cost of goods sold		$72700		$86900		$79570

Periodic FIFO :-

FIFO	Cost of Goods Available for Sale			Cost of Goods Sold-Periodic FIFO			Ending Inventory-Periodic FIFO
	# of units	Cost pu	Cost of Goods Available for Sale	# of units	Cost pu	Cost of Goods Sold-Periodic FIFO	# of units	Cost pu	Ending Inventory-Periodic FIFO
Beginning Inventory	2000	$5	$10000	2000	$5	$10000
Purchases:-
Oct 3	2500	$6	$15000	2500	$6	$15000
Oct 9	3500	$7	$24500	3500	$7	$24500
Oct 19	3000	$8	$24000	2900	$8	$23200	100	$8	$800
Oct 25	4000	$9	$36000				4000	$9	$36000
Total	15000		$109500	10900		$72700	4100		$36800

Periodic LIFO :-

LIFO	Cost of Goods Available for Sale			Cost of Goods Sold-Periodic LIFO			Ending Inventory-Periodic LIFO
	# of units	Cost pu	Cost of Goods Available for Sale	# of units	Cost pu	Cost of Goods Sold-Periodic LIFO	# of units	Cost pu	Ending Inventory-Periodic LIFO
Beginning Inventory	2000	$5	$10000				2000	$5	$10000
Purchases:-
Oct 3	2500	$6	$15000	400	$6	$2400	2100	$6	$12600
Oct 9	3500	$7	$24500	3500	$7	$24500
Oct 19	3000	$8	$24000	3000	$8	$24000
Oct 25	4000	$9	$36000	4000	$9	$36000
Total	15000		$109500	10900		$86900	4100		$22600

Periodic Average Cost :-

	Cost of Goods Available for Sale			Cost of Goods Sold			Ending Inventory
	# of units	Cost pu	Cost of Goods Available for Sale	# of units	Cost pu	Cost of Goods Sold	# of units	Cost pu	Ending Inventory
Beginning Inventory	2000	$5	$10000	10900         $7.3        $79570			4100          $7.3        $29930
Purchases:-
Oct 3	2500	$6	$15000
Oct 9	3500	$7	$24500
Oct 19	3000	$8	$24000
Oct 25	4000	$9	$36000
Total	15000		$109500	10900		$79570	4100		$29930

Avg cost per unit = Total cost available for sale/No of units available for sale

     = $109500/15000 = $7.3