Question

Problem 6-03A a, b1-b2, c (Part Level Submission) (Video) Skysong, Inc. had a beginning inventory on January 1 of 105 units of Product 4-18-15 at a cost of $21 per unit. During the year, the following purchases were made. Mar. 15 280 units at $24 Sept. 4 245 units at $27 July 20 175 units at $25 Dec. 2 70 units at $30 700 units were sold. Skysong, Inc. uses a periodic inventory system.

(a) Determine the cost of goods available for sale. The cost of goods available for sale $

Answer 1

As we know that total cost of goods available for sale=Beginning inventory+Purchase of goods.

So, we can use the following table to find out The total cost of goods available for sale-

Date	Particulars	Units Purchased	Rate per unit	Total cost
January 1	Beginning inventory (105 x $21 per unit)	105	$21	$2,205
Mar. 15	Purchase	280	$24	$6,720
July 20	Purchase	175	$25	$4,375
Sept. 4	Purchase	245	$27	$6,615
Dec. 2	Purchase	70	$30	$2,100
	The total cost of goods available for sale	875 Units		$22,015

The total cost of goods available for sale=$22,015 (875 Units)

Assuming that mateariial is to be issued for sale at the end, of all purchases.

A) LIFO Method

LIFO Method
Date	Purchase	Cost of goods sold	Inventory balance
	Units	$/Units	$ Total	Units	$/Units	$ Total	Units	$/Units	$ Total
Jan-01	Opening Balance				105	$21	$2,205
Mar. 15	280	24	6720				105	$21	$2,205
280	24	6720
Jul-20	175	25	4375				105	$21	$2,205
280	24	6720
175	25	4375
Sept. 4	245	27	6615				105	$21	$2,205
280	24	6720
175	25	4375
245	27	6615
Dec. 2	70	30	2100				105	$21	2,205
			280	24	6720
			175	25	4375
			245	27	6615
			70	30	2100
			70	30	2100
			245	27	6615
			175	25	4375
			210	24	5040
			Closing Balance	105	$21	$2205
			70	$24	$1680

B) Under LIFO Method-

COGS=18130

Closing Balance=175 Units of $3,885.

FIFO Method
Date	Purchase	Cost of goods sold	Inventory balance
	Units	$/Units	$ Total	Units	$/Units	$ Total	Units	$/Units	$ Total
Jan-01	Opening Balance				105	$21	$2,205
Mar. 15	280	24	6720				105	$21	2,205
280	24	6720
Jul-20	175	25	4375				105	$21	2,205
280	24	6720
175	25	4375
Sept. 4	245	27	6615				105	$21	2,205
280	24	6720
175	25	4375
245	27	6615
Dec. 2	70	30	2100				105	$21	2,205
280	24	6720
175	25	4375
245	27	6615
70	30	2100
			105	$21	2,205
			280	24	6720
			175	25	4375
			140	27	3780
			Closing Balance	105	$27	$2835
			70	$30	$2100

Under FIFO Method-

COGS=17080

Closing Balance=175 Units of $4,935

C) Average-Cost Method-

Date	Purchase	Cost of goods sold	Inventory balance	AVERAGE-COST
	Units	$/Units	$ Total	Units	$/Units	$ Total	Units	$/Units	$ Total
Jan-01	Opening Balance				105	$21	$2,205	$21
Mar. 15	280	24	6720				105	$21	$2,205	$23
280	24	6720
Jul-20	175	25	4375				105	$21	$2,205	$24
280	24	6720
175	25	4375
Sept. 4	245	27	6615				105	$21	$2,205	$25
280	24	6720
175	25	4375
245	27	6615
Dec. 2	70	30	2100				105	$21	2,205	$25
			280	24	6720
			175	25	4375
			245	27	6615
			70	30	2100
			700	25	17500
			Closing Balance	175	$25	$4375

Under Average cost Method-

COGS=$17,500

Closing Balance=175 Units of $4,375.

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