Question

Required information [The following information applies to the questions displayed below.] Laker Company reported the following January purchases and sales data for its only product. Date Activities Units Acquired at Cost Units sold at Retail Jan. 1 Beginning inventory 195 units @ $ 12.00 = $ 2,340 Jan. 10 Sales 155 units @ $ 21.00 Jan. 20 Purchase 120 units @ $ 11.00 = 1,320 Jan. 25 Sales 135 units @ $ 21.00 Jan. 30 Purchase 290 units @ $ 10.50 = 3,045 Totals 605 units $ 6,705 290 units The Company uses a perpetual inventory system. For specific identification, ending inventory consists of 315 units, where 290 are from the January 30 purchase, 5 are from the January 20 purchase, and 20 are from beginning inventory. Required: 1. Complete the table to determine the cost assigned to ending inventory and cost of goods sold using specific identification. 2. Determine the cost assigned to ending inventory and to cost of goods sold using weighted average. 3. Determine the cost assigned to ending inventory and to cost of goods sold using FIFO. 4. Determine the cost assigned to endinginventory and to cost of goods sold using LIFO.

Answer 1

Preparing Table of Quantity for opening, purchase, Sales & Closing Stock

Date	Opening	Purchase	COGS	Closing
	Unit	Unit	Unit	Unit
Jan.1	195			195
Jan.10	195		155	40
Jan.20	40	120		160
Jan.25	160		135	25
Jan.30	25	290		315

1. Determination of the cost assigned to ending inventory & cost of goods sold using specific identification -

Ending inventory cost = 290 qty. are from January 30 purchase (290*10.5) + 5 qty. are from january20 purchase (5*11) + 20 qty.are from beginning inventory (20*12)

= 290*10.5 + 5*11 + 20*12

= 3045 + 55 + 240

= 3340

COGS = opening + total purchases - Ending Inventory

= 2340 + 4365 - 3340 ( as per above calculation)

COGS = 6705 - 3340

= 3365

2. Determination of the cost assigned to ending inventory & cost of goods sold using Weighted Average -

Date	Opening			Purchase			COGS			Closing
	Unit	Rate	Value	Unit	Rate	Value	Unit	Rate	Value	Unit	Rate	Value
Jan.1	195	12	2340							195	12	2340
Jan.10	195	12	2340				155	12	1860	40	12	480
Jan.20	40	12	480	120	11	1320				160	11.25	1800
Jan.25	160	11.25	1800				135	11.25	1518.75	25	11.25	281.25
Jan.30	25	11.25	281.25	290	10.5	3045				315	10.56	3326.25

Ending Inventory as per above table 315 units @ 10.56 = 3326.25

COGS = 155*12 + 135*11.25

= 1860 + 1518.75

= 3378.75

3. Determination of the cost assigned to ending inventory & cost of goods sold using FIFO -

Date	Opening			Purchase			COGS			Closing
	Unit	Rate	Value	Unit	Rate	Value	Unit	Rate	Value	Unit	Rate	Value
Jan.1	195	12	2340							195	12	2340
Jan.10	195	12	2340				155	12	1860	40	12	480
Jan.20	40	12	480							40	12	480
Jan.20				120	11	1320				120	11	1320
Jan.25	40	12	480				40	12	480	0	0	0
Jan.25	120	11	1320				95	11	1045	25	11	275
Jan.30	25	11	275							25	11.00	275
Jan.30				290	10.5	3045				290	10.5	3045

Ending Inventory Cost = 25 units @ 11 + 290 units @ 10.5

= 25*11 + 290*10.5

= 275 + 3045

= 3320

COGS = 155 units @ $ 12 + 40 units @ $ 12 + 95 units @ $ 11

= 1860 + 480+ 1045

= 3385

4. Determination of the cost assigned to ending inventory & cost of goods sold using LIFO -

Date	Opening			Purchase			COGS			Closing
	Unit	Rate	Value	Unit	Rate	Value	Unit	Rate	Value	Unit	Rate	Value
Jan.1	195	12	2340							195	12	2340
Jan.10	195	12	2340				155	12	1860	40	12	480
Jan.20	40	12	480							40	12	480
Jan.20				120	11	1320				120	11	1320
Jan.25	40	12	480				15	12	180	25	12	300
Jan.25	120	11	1320				120	11	1320	0	0	0
Jan.30	25	12	300							25	12.00	300
Jan.30				290	10.5	3045				290	10.5	3045

Ending Inventory Cost = 25 units @ 12 + 290 units @ 10.5

= 25*12 + 290*10.5

= 300 + 3045

= 3345

COGS = 155 units @ $ 12 + 15 units @ $ 12 + 120 units @ $ 11

= 1860 + 180+ 1320

= 3360

Please check with your answer and let me know.