Question

5. Wise Books has the following transactions in August related to merchandise inventory (Click the icon to view the transactions.) Read the requirements a. Determine the cost of goods sold and ending merchandise inventory by preparing a perpetual inventory record using the specific identification method. Assume the following costing information for the books sold during the month: August 3: 2 books costing $12 each August 15: 5 books costing $12 each and 7 books costing $20 each August 28: 2 books costing $20 each and 1 books costing $23 cach Start by entering the beginning inventory balances. Enter the transactions in chronological order, calculating new inventory on hand balances after each transaction. Once all of the transactions have been entered into the perpetual record, calculate the quantity and total cost of merchandise inventory purchased, sold, and on hand at the end of the period. (Enter the oldest inventory layers first.) Purchases Cost of Goods Sold Inventory on Hand Unit Total Total Unit. Total Date Quantity Cost Cost Quantity Cost Cost I Quantity Cost Cost Unit Enter any number in the edit fields and then click Check Answer.

Answer 1

1) Specific Identification Method

	Purchases			Cost of Goods Sold			Inventory on Hand
Date	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost
Aug 1							8	$12	$96
Aug 3				2	$12	$24	6	$12	$72
Aug 12	10	$20	$200				6	$12	$72
							10	$20	$200
Aug 15				5	$12	$60	1	$12	$12
				7	$20	$140	3	$20	$60
Aug 20	2	$23	$46				1	$12	$12
							3	$20	60
							2	$23	46
Aug 28				2	$20	$40	1	$12	$12
				1	$23	23	1	$20	20
							1	$23	23
Totals	12		$246	17		$287	3		$55

2) FIFO Method

	Purchases			Cost of Goods Sold			Inventory on Hand
Date	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost
Aug 1							8	$12	$96
Aug 3				2	$12	$24	6	$12	$72
Aug 12	10	$20	$200				6	$12	$72
							10	$20	$200
Aug 15				6	$12	$72
				6	$20	120	4	$20	$80
Aug 20	2	$23	$46				4	$20	$80
							2	$23	46
Aug 28				3	$20	$60	1	$20	$20
							2	$23	46
Totals	12		$246	17		$276	3		$66

3) LIFO Method

	Purchases			Cost of Goods Sold			Inventory on Hand
Date	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost
Aug 1							8	$12	$96
Aug 3				2	$12	$24	6	$12	$72
Aug 12	10	$20	$200				6	$12	$72
							10	$20	$200
Aug 15				10	$20	$200
				2	$12	24	4	$12	$48
Aug 20	2	$23	$46				4	$12	48
							2	$23	46
Aug 28				2	$23	$46	3	$12	$36
				1	$12	12
Totals	12		$246	17		$306	3		$36

4) Weighted-Average Method

	Purchases			Cost of Goods Sold			Inventory on Hand
Date	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost
Aug 1							8	$12	$96
Aug 3				2	$12	$24	6	$12	$72
Aug 12	10	$20	$200				6	$12	$72
							10	$20	$200
Average							16	(272/16)= $17	$272
Aug 15				12	$17	$204	4	$17	$68
Aug 20	2	$23	$46				4	$17	$68
							2	$23	46
Average							6	(114/6)= $19	$114
Aug 28				3	$19	$57	3	$19	$57
Totals	12		$246	17		$285	3		$57