Question

Scoresby Inc. tracks the number of units purchased and sold throughout each year but applies its inventory costing method at the end of the year, as if it uses a periodic inventory system. Assume its accounting records provided the following information at the end of the annual accounting period, December 31. Units 1,500 Unit Cost $30 31 Transactions a. Inventory, Beginning For the year: b. Purchase, March 5 c. Purchase, September 19 d. Sale, April 15 (sold for $75 per unit) e. Sale, October 31 (sold for $78 per unit) f. Operating expenses (excluding income tax expense), $393,000 7,500 3,500 2,100 6,500 Required: 1. Calculate the number and cost of goods available for sale. Number of Goods Available for Sale Cost of Goods Available for Sale 12,500 units $ 393,000 2. Calculate the number of units in ending inventory. Ending Inventory 3,900 units

Answer 1

1)	Number of Goods available for sale				12500
	Cost of goods Available for sale				393000
	date	Explanation			units	per unit	Amount
	1-Jan	inventory,Beginning			1,500	30	45000
	5-Mar	purchase			7,500	31	232500
	19-Sep	purchase			3,500	33	115500
		total			12,500		393000
		weighted average cost =393000/12500=					31.44
2)	ending inventory		3900	units
	ending inventory = nmber of goods available for sale - sale units
			12,500 - (6,500+2100)
			3900	units
3)				Cost of	Cost of
				ending	Goods
				inventory	sold
	FIFO			128700	264300
	LIFO			119400	273600
	Weighted average cost			122616	270384
4)			income statement
					FIFO	LIFO	Weighted
							Average
	Sales				664500	664500	664500
	cost of goods sold				264300	273600	270384
	Gross profit				400200	390900	394116
	operatinge xpense				393,000	393,000	393,000
	net income				7,200	-2,100	1,116