Question

Sage Hill Inc. sells a snowboard, EZslide, that is popular with snowboard enthusiasts. Below is information relating to Sage Hill Inc.’s purchases of EZslide snowboards during September. During the same month, 100 EZslide snowboards were sold. Sage Hill Inc. uses a periodic inventory system.

Date		Explanation		Units		Unit Cost		Total Cost
Sept. 1		Inventory		15		$110		$ 1,650
Sept. 12		Purchases		48		113		5,424
Sept. 19		Purchases		53		114		6,042
Sept. 26		Purchases		24		115		2,760
		Totals		140				$15,876

(a) Compute the ending inventory at September 30 using the FIFO, LIFO and average-cost methods. (Round average cost per unit to 3 decimal places, e.g. 125.153 and final answers to 0 decimal places, e.g. 125.)

		FIFO		LIFO		AVERAGE-COST
The ending inventory at September 30		$Enter a dollar amount		$Enter a dollar amount		$Enter a dollar amount

(b) Compute the cost of goods sold at September 30 using the FIFO, LIFO and average-cost methods. (Round average cost per unit to 3 decimal places, e.g. 125.153 and final answers to 0 decimal places, e.g. 125.)

		FIFO		LIFO		AVERAGE-COST
Cost of goods sold		$Enter a dollar amount		$Enter a dollar amount		$Enter a dollar amount

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Answer 1

Periodic Inventory System: Under Periodic Inventory System, Physical Stocks are compared at the beginning and at the end of the period Computation of Ending Inventory Cost TABLE Sep-01 opening Sep-12 Purchases Sep-19 Purchases Sep-26 Purchases Total Cost 15 $ 110.00 400 $ 113.00 531 S 114.00 241 $ 115.00 1401 Total cost $ 1.650.00 $ 5,424.00 S 6.042.00 $ 2.760.00 cumulative Units Cumulative Cost 15 $ 1,650.00 631 $ 7.074.00 1161 S 13.116.00 140 $ 15,876.00 COMPUTATION OF ENDING INVENTORY ON SEPT-30 Ending Inventory = Opening Inventory + Purchases - Sales = 15+ (48+53+24) - 100 (Sales 100 units given in question) 40 units Solution to Q-1 FIFO First in - First Out Since in FIFO First Iventory is Sold First Ending 40 units value last purchase of 24 units @$ 115 and remaining 16 units (40-24) @114 from purchase on Sept-26 remaining with Inventory on Sept-30 Hence Cost of Closing Inventory under FIFO (24 X $115) + (16 X $114) $ 4,584.00

LIFO Last in - First Out Since in LIFO Last Iventory is Sold First Opening/oldest 40 units value Opening inventory of 15 units @$110 and remaining 25 units (40-25) @ $113 from purchase on Sept. 12 remaining in inventory on Sept-30 Hence Cost of Closing Inventory under LIFO =(15 X $110) + (12 X $113) $ 4,475.00 Average cost Average Cost under Periodic Inventory System Total Cost of goods Total Units 15876 140 113.400 Average Cost per purchase of unit = $ 113.400 Hence Cost of Closing Inventory under Average Cost method Closing Inventory X average cost per unit 40 X 113.400 $ 4,536.00

Solution to Q-2 Cost of Goods Sold - Cost of Opening Inventory Purches Value - Cost of Closing Inventory Cost Of Opening Inventory Sep-01 15 Units @ $ 110 1650 Cost of Purchases Sep-12 48 Units @ $ 113 Sep-19 53 Units Ⓡ$ 114 Sep-26 24 Units @ $ 115 TOTAL $ $ $ 5,424.00 6,042.00 2,760.00 14,226.00 Cost of dosing Inventory FIFO From "A" in Q-1 From "B" in Q-1 $ 4,584.00 $ 4,475.00 UFO Cost of Goods Sold FIFO. Cost of Opening Inventory + Purchses Value - Cost of Closing Inventory = 1650 + 14226 - 4584 = $ 11, 292.00 LIFO. Cost of Opening Inventory + Purchses Value Cost of Closing Inventory = 1650 14226 - 4475 = $ 11,401.00 Average Cost = Average Cost per Unit X No.of Units Sold - $113.400 X 100 (average cost per unit as mentioned in "D" of solution 1 . $ 11,340.00