Question

Inventory Costing Methods-Perpetual Method Arrow Company is a retailer that uses the perpetual inventory system. August 1 Beginning inventory 5 Purchased 8 Purchased 11 Sold 80 units of Product A @ $1,600 total cost 100 units of Product A @ $2,116 total cost 200 units of Product A @ $4,416 total cost 170 units of Product A @ $4,800 total sale Calculate the inventory cost of item A on August 11 (after the sale) using (a) first-in, first-out, (b) last-in, first-out, and (c) the weighted average cost methods. Do not round until your final answers. Round your final answers to the nearest dollar. A. First-in, first-out Ending Inventory B. Last-in, first-out Ending Inventory C. Weighted average Ending Inventory

Answer 1

Solution A:

Computation of ending inventory COGS under FIFO
Date	Beginning Inventory			Purchase			Cost of Goods Sold			Ending Inventory
	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount
1-Aug	80	$20.00	$1,600	0	$0.00	$0	0	$0.00	$0	80	$20.00	$1,600
5-Aug	80	$20.00	$1,600	100	$21.16	$2,116	0	$0.00	$0	80	$20.00	$1,600
										100	$21.16	$2,116
8-Aug	80	$20.00	$1,600	200	$22.08	$4,416	0	$0.00	$0	80	$20.00	$1,600
	100	$21.16	$2,116							100	$21.16	$2,116
										200	$22.08	$4,416
11-Aug	80	$20.00	$1,600	0	$0.00	$0	80	$20.00	$1,600	10	$21.16	$212
	100	$21.16	$2,116				90	$21.16	$1,904	200	$22.08	$4,416
	200	$22.08	$4,416
Total							170		$3,504	210		$4,628

Solution B:

Computation of ending inventory COGS under LIFO
Date	Beginning Inventory			Purchase			Cost of Goods Sold			Ending Inventory
	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount
1-Aug	80	$20.00	$1,600	0	$0.00	$0	0	$0.00	$0	80	$20.00	$1,600
5-Aug	80	$20.00	$1,600	100	$21.16	$2,116	0	$0.00	$0	80	$20.00	$1,600
										100	$21.16	$2,116
8-Aug	80	$20.00	$1,600	200	$22.08	$4,416	0	$0.00	$0	80	$20.00	$1,600
	100	$21.16	$2,116							100	$21.16	$2,116
										200	$22.08	$4,416
11-Aug	80	$20.00	$1,600	0	$0.00	$0	170	$22.08	$3,754	80	$20.00	$1,600
	100	$21.16	$2,116							100	$21.16	$2,116
	200	$22.08	$4,416							30	$22.08	$662
Total							170		$3,754	210		$4,378

Solution C:

Computation of ending inventory COGS under Weighted Average Cost
Date	Beginning Inventory			Purchase			Cost of Goods Sold			Ending Inventory
	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount
1-Aug	80	$20.00	$1,600	0	$0.00	$0	0	$0.00	$0	80	$20.00	$1,600
5-Aug	80	$20.00	$1,600	100	$21.16	$2,116	0	$0.00	$0	180	$20.64	$3,716
8-Aug	180	$20.64	$3,716	200	$22.08	$4,416	0	$0.00	$0	380	$21.40	$8,132
11uag	380	$21.40	$8,132	0	$0.00	$0	170	$21.40	$3,638	210	$21.40	$4,494
Total							170		$3,638	210		$4,494