Question

Inventory methods. Jones Company was formed on December 1, 2013. The following information is available from Jones's inventory record for Product X.

  Units Unit Cost

January 1, 2014 (beginning inventory) 1,500 $18.00

Purchases:

January 5, 2014 2,600 $20.00

January 25, 2014 2,400 $21.00

February 16, 2014 1,000 $22.00

March 15, 2014 2,000 $23.00

A physical inventory on March 31, 2014, shows 2,300 units on hand.

Instructions

Prepare schedules to compute the ending inventory at March 31, 2014, under each of the following inventory methods. Round calculations to the nearest cent:

(a) FIFO.

(b) LIFO.

(c) Weighted-average.

Show supporting computations in good form.

Answer 1

	FIFO	LIFO	Weighted Average
Cost of Goods available for sale	$   1,97,400.00	$ 1,97,400.00	$        1,97,400
Ending Inventory	$            52,600	$            43,000	$           47,794
Cost of Goods Sold	$   1,44,800.00	$ 1,54,400.00	$        1,49,606

	Units	Cost per unit	value
Beginning Balance	1500	$              18.00	$     27,000.00
Purchases
05-Jan	2600	$              20.00	$     52,000.00
25-Jan	2400	$              21.00	$     50,400.00
16-Feb	1000	$              22.00	$     22,000.00
15-Mar	2000	$              23.00	$     46,000.00
	9500		$ 1,97,400.00

Average Cost of Inventory
Units	(A)	9500
Total Cost	(B)	$ 1,97,400.00
Average Cost	(C=B/A)	$              20.78

FIFO
Total Units Available for sale		9500
Units Sold		7200
Closing Stock in Units		2300
Valuation
Ending Inventory	2000	@	$              23.00	$      46,000.00
	300	@	$              22.00	$         6,600.00
Value Of Ending Inventory				$      52,600.00
Cost of Goods sold	(197400-52600)			$   1,44,800.00

LIFO
Total Units Available for sale		9500
Units Sold		7200
Closing Stock in Units		2300
Valuation
Ending Inventory	1500	@	$              18.00	$      27,000.00
	800	@	$              20.00	$      16,000.00
Value Of Ending Inventory				$      43,000.00
Cost of Goods sold	(197400-43000)			$   1,54,400.00

Weighted Average method
Total Units Available for sale		9500
Units Sold		7200
Closing Stock in Units		2300
Valuation
Ending Inventory	2300	@	$ 20.78	$      47,794.00
Value Of Ending Inventory				$      47,794.00
Cost of Goods sold	(Total Purchase and opening stock Minus Closing Stock)			$   1,49,606.00