Question

EME Assuming periodic inventory methods. Show work and circle your answers Rock Shop shows the following data related to an item of inventory Inventory, January 1 300 units @ $10.00 Purchase, January 9 700 units @ $11.00 Purchase, January 19 140 units @ $13.00 Ending Inventory, January 31 250 units OW CALCULATIONS structions What value should be assigned to the ending inventory and cost of goods (a) using FIFO? Cost of Goods Sold = Endimg inventory (b)using LIFO? Cost of Goods Sold = Ending inventor (c) using weighted average Cost of Goods Sold = Endimg inventor (d)Assuming the company keeps perpetual inventory and uses the moving average method ofment is the cost of goods sold if all 890 units were sold on January 12? Cost of Good Son= Under moving average, 2hat is the January 31 ending inventory? Ending the (e)Assuming the company keeps perpetual inventory and uses the LIFO method of inventory of goods sold if all 890 units were sold on January 12? Cost of Goods Soto Under perpetual LIFO, what is the January 31 ending inventory Ending Inventory =

problem D and problem E

Answer 1

Ans. Units 300 Available for sale Date 1-Jan 9-Jan 19-Jan Cost of goods available for sale Rate $10.00 $11.00 $13.00 700 Total $3,000 $7,700 $1,820 $12,520 140 1140 Ending inventory units = 250 units Units sold = Units available for sale - Units in ending inventory 1140 - 250 890 units Ans. A Periodic FIFO: Date Units 1-Jan 9-Jan 300 590 890 Rate $10.00 $11.00 Total $3,000 $6,490 $9,490 Cost of goods sold *In FIFO method the units that have purchased first, are released the first one and the ending inventory units remain from the last purchases.

Ending inventory = Total cost of goods available for sale - Cost of goods sold $12,520 - $9,490 $3,030 Ans. B Units 140 Periodic LIFO: Date 19-Jan 9-Jan 1-Jan Cost of goods sold Rate $13.00 $11.00 $10.00 700 Total $1,820 $7,700 $500 $10,020 50 890 *In LIFO method the units that have purchased last, are released the first one and ending inventory units remain from the first purchase. Ending inventory = Total cost of goods available for sale - Cost of goods sold $12,520 - $10,020 = $2,500

Ans. Periodic Weighted Average: Average cost per unit = Total cost of goods available for sale / Total units available $12,520 / 1140 $10.9825 per unit Cost of goods sold = No. of units sold * Average cost per unit 890 * $10.9825 $9,774 (rounded off) Ending inventory = Total cost of goods available for sale - Cost of goods sold $12,520 - $9,774 $2,746 Ans. D Cost of goods sold Quantity Rate Total cost Moving average Date 1-Jan 9-Jan 12-Jan 19-Jan Total Quantity 300 700 Purchase Rate $10.00 $11.00 Total cost $3,000 $7,700 Balance Quantity Rate 300 $10.00 1000 $10.70 $10.70 250 $11.99 Ending inventory 890 $10.70 Total cost $3,000 $10,700 $1,177 $2,997 $2,997 $9,523 110 140 $13.00 $1,820 Cost of goods sold $9,523

*Weighted average rate is calculated by using the formula of (Total available balance / Total units available). Ans. E LIFO: Balance Cost of goods sold Quantity Rate Date Total cost Purchase Rate $10.00 $11.00 Quantity 300 700 1-Jan 9-Jan Total cost $3,000 $7,700 Quantity 300 300 700 Rate $10.00 $10.00 $11.00 Total cost $3,000 $3,000 $7,700 12-Jan 700 190 $11.00 $10.00 $7,700 $1,900 19-Jan 140 $13.00 $1,820 110 $10.00 110 $10.00 140 Ending inventory $1,100 $1,100 $1,820 $2,920 $13.00 Total Cost of goods sold $9,600 *In LIFO method the units that have purchased last, are released the first one and the ending inventory units remain from the first purchases.