Question

Kirtland Corporation uses a periodic inventory system. At the end of the annual accounting period, December 31, the accounting records for the most popular item in inventory showed the following:

	Transactions	Units	Unit Cost
Beginning inventory, January 1		340	$3.00
Transactions during the year:
a.	Purchase, January 30	240	2.80
b.	Purchase, May 1	400	4.00
c.	Sale ($5 each)	(100)
d.	Sale ($5 each)	(640)

Required:

a. Compute the amount of goods available for sale.

Req A Req B and C Compute the amount of goods available for sale. Goods available for sale

b. & c. Compute the amount of ending inventory and cost of goods sold at December 31, under Average cost, First-in, first-out, Last-in, first-out and Specific identification inventory costing methods. For Specific identification, assume that the first sale was selected two-fifths from the beginning inventory and three-fifths from the purchase of January 30. Assume that the second sale was selected from the remainder of the beginning inventory, with the balance from the purchase of May 1.

Answer 1

Requirement b

Goods available for sale = $3,292.

.

Requirement b and c

	FIFO	LIFO	Weighted Average	Specific identification
Ending Inventory	$              960	$                       720	$                 806	$            744.00
Cost of Goods Sold	$           2,332	$                   2,572	$             2,486	$        2,548.00

Working

	Units	Cost per unit	value
Beginning Balance	340	$                     3.00	$ 1,020
Purchases
	240	$                     2.80	$ 672
	400	$                     4.00	$ 1,600
Cost of goods available for sale	980		$ 3,292

.

Average Cost of Inventory
Units	(A)	980
Total Cost	(B)	$ 3,292
Average Cost	(C=B/A)	$ 3.36

.

.

FIFO
Total Units Available for sale		980
Units Sold		740
Closing Stock in Units		240
Valuation
Ending Inventory	240	@	$               4.00	$ 960
	0	@	$               7.00	$ 0
Value Of Ending Inventory				$ 960
Cost of Goods sold	3292 minus 960			$        2,332.00
LIFO
Total Units Available for sale		980
Units Sold		740
Closing Stock in Units		240
Valuation
Ending Inventory	240	@	$               3.00	$ 720
	0	@	$               5.50	$ 0
Value Of Ending Inventory				$                  720
Cost of Goods sold	3292 minus 720			$              2,572
Weighted Average method
Total Units Available for sale		980
Units Sold		740
Closing Stock in Units		240
Valuation
Ending Inventory	240	@	$               3.36	$                  806
Value Of Ending Inventory				$                  806
Cost of Goods sold	(Total Purchase and opening stock Minus Closing Stock)			$              2,486

.

	Units available	Sold	Ending Units	Cost per unit	Ending Inventory
			0		$          -
Beginning Inventoty	340	340	0	$   3.00	$          -
First purchase	240	60	180	$   2.80	$       504
second purchase	400	340	60	$   4.00	$       240
Total					$       744