Question

[The following information applies to the questions displayed below. Laker Company reported the following January purchases and sales data for its only product. Date Activities Units Acquired at Cost Units sold at Retail Jan. 1 Beginning inventory 155 units & $8.00 - $1,240 Jan. 10 Sales 115 units $17.00 Jan. 20 Purchase 90 unitse $7.00 - 630 Jan. 25 Sales 95 units $ 17.00 Jan. 30 Purchase 210 unitse $6.50 - 1,365 Totals 455 units $3,235 210 units The Company uses a perpetual inventory system. For specific identification, ending inventory consists of 245 units, where 210 are from the January 30 purchase, 5 are from the January 20 purchase, and 30 are from beginning inventory. Required: 1. Complete the table to determine the cost assigned to ending inventory and cost of goods sold using specific identification. 2. Determine the cost assigned to ending inventory and to cost of goods sold using weighted average. 3. Determine the cost assigned to ending inventory and to cost of goods sold using FIFO. 4. Determine the cost assigned to ending inventory and to cost of goods sold using LIFO.

Answer 1

Specific ld Cost of Goods Available for Sale Cost of Goods Cost per Available No of Units Unit for Sale (A) (B) (AxB) Beginning Inventory 155 $ 8.00 $1,240.00 Purchases Jan 20 90 $ 7.00 $ 630.00 Jan 30 210 $ 6.50 $1,365.00 Cost of Goods Sold Ending Balance No of No of Cost of Units in Units Cost per Goods ending Cost per Ending Sold Unit Sold inventory Unit Inventory (C) (D) (C)(D) (E) (F) (E) (F) 30 $ 8.00 $240.00 5 $ 210 $ 7.00 $35.00 6.50 $1,365.00 Sales Jan 10 Jan 25 115 $ 8.00 $ 920.00 10'$ 8.00 $ 80.00 85 $ 7.00 $ 595.00 210 $ 1,595.00 Total 455 $ 3,235.00 245 $1,640.00

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Jan 10 Jan 25 Note: Cost of goods sold: as no purcahases were made before this date, the sale was made out of the beginning inventory, hence has been calculated @ $8 The purchase has been calculated as follows:- out of beginning inventory= Beginning inventory - Sold on Jan 10 - Ending Inventory =155 units-115 units-30 units = 10 units out of Jan 20 Purchase = 90 units-5 units = 85 units

Weighted Average Cost of Goods Available for Sale Cost of Goods Sold Ending Balance Cost of No of Goods No of Cost of Units in Cost per Available Units Cost per Goods ending Cost per Ending No of Units Unit for Sale Sold Unit Sold inventory Unit Inventory (A) (AXB) (c) (D) (C) x (D) (E) (6) (E) (F) Beginning Inventory 155 $ 8.00 $1,240.00 155 $ 8.00 $1,240.00 Jan 10 115 $ 8.00 $ 920.00 40 $ 8.00 $320.00 Jan 20 90 $ 7.00 $ 630.00 130 $ 7.31 $950.00 Jan 25 95 $ 7.31 $ 694.23 35' $ 7.31 $255.77 Jan 30 210 $ 6.50 $ 1,365.00 245' $ 6.62 $1,620.77 (B)

Weighted average cost = Total cost/Total Units 20-Jan = ($320+$630)/130 = $7.31 30-Jan =($255.77+$1365)/245 = $6.62

FIFO Beginning Inventory Jan 10 Jan 20 Cost of Goods Available for Sale Cost of Goods Sold Ending Balance Cost of No of Goods No of Cost of Units in Cost per Available Units Cost per Goods ending Cost per Ending No of Units Unit for Sale Sold Unit Sold inventory Unit Inventory (A) (B) (AXB) (C) (D) (C)(D) (E) (F) (E) (F) 155 $ 8.00 $1,240.00 155 $ 8.00 $1,240.00 115 $ 8.00 $ 920.00 40 $ 8.00 $320.00 90 $ 7.00 $ 630.00 40 $ 8.00 $320.00 90 $ 7.00 $630.00 40 $ 8.00 $ 320.00 35 $ 7.00 $245.00 55 $ 7.00 $ 385.00 210 $ 6.50 $1,365.00 35 $ 7.00 $245.00 210 $ 6.50 $1,365.00 Jan 25 Jan 30

LIFO Cost of Goods Available for Sale Cost of Goods Sold Ending Balance Cost of No of Goods No of Cost of Units in Cost per Available Units Cost per Goods ending Cost per Ending No of Units Unit for Sale Sold Unit Sold inventory Unit Inventory (A) (B) (AB) (C) (D) (C)(D) (E) (F) (E) x (F) Beginning Inventory 155 $ 8.00 $1,240.00 155 $ 8.00 $1,240.00 Jan 10 115 $ 8.00 $ 920.00 40 $ 8.00 $320.00 Jan 20 90 $ 7.00 $ 630.00 40 $ 8.00 $320.00 90 $ 7.00 $630.00 Jan 25 90 $ 7.00 $ 630.00 35 $ 8.00 $280.00 5 $ 8.00 $ 40.00 Jan 30 210 $ 6.50 $1,365.00 35 $ 8.00 $280.00 210 $ 6.50 $1,365.00

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