Question

Sheffield Corp. began the year with 8 units of marine floats at a cost of $8 each. During the year, it made the following purchases: May 5, 30 unit at $17; July 16, 16 units at $20; and December 7, 21 units at $23. Assume there are 25 units on hand at the end of the period. Sheffield uses the periodic approach.

A. Determine cost of goods sold under FIFO

B. Determine cost of goods sold under LIFO

C. Calculate the average unit cost

D. Determine the cost of goods sold under the average cost.

Answer 1

Answers

• [A]
  Cost of Goods Sold under FIFO = $ 814

FIFO	Cost of Goods available for sale			Cost of Goods Sold			Ending Inventory
	Units	Cost/unit	COG for sale	Units sold	Cost/unit	COGS	Units	Cost/unit	Ending inventory
Beginning Inventory	8	$                   8.00	$                              64.00	8	$                 8.00	$                       64.00	0	$                   8.00	$                         -
Purchases:
05-May	30	$                17.00	$                            510.00	30	$               17.00	$                     510.00	0	$                 17.00	$                         -
16-Jul	16	$                20.00	$                            320.00	12	$               20.00	$                     240.00	4	$                 20.00	$                  80.00
07-Dec	21	$                23.00	$                            483.00	0	$               23.00	$                              -	21	$                 23.00	$                483.00
TOTAL	75		$                        1,377.00	50		$                     814.00	25		$                563.00

• [B]
  Cost of Goods Sold at LIFO= $ 1024

LIFO	Cost of Goods available for sale			Cost of Goods Sold			Ending Inventory
	Units	Cost/unit	COG for sale	Units sold	Cost/unit	COGS	Units	Cost/unit	Ending inventory
Beginning Inventory	8	$                   8.00	$                              64.00	0	$                 8.00	$                              -	8	$                   8.00	$                  64.00
Purchases:
05-May	30	$                17.00	$                            510.00	13	$               17.00	$                     221.00	17	$                 17.00	$                289.00
16-Jul	16	$                20.00	$                            320.00	16	$               20.00	$                     320.00	0	$                 20.00	$                         -
07-Dec	21	$                23.00	$                            483.00	21	$               23.00	$                     483.00	0	$                 23.00	$                         -
TOTAL	75		$                        1,377.00	50		$                 1,024.00	25		$                353.00

• [C]

Average unit Cost = $ 1377 / 75 units = $ 18.36

• [D]
  Cost of Goods under Average cost = 50 units x $ 18.36 = $ 918