Question

Dave Company's inventory records for its retail division show the following at December 31: (Click the icon to view the accounting records.) At December 31, 11 of these units are on hand. Read the requirements Requirement 1. Compute cost of goods sold and ending inventory, using each of the following four inventory methods: Begin by entering the number of units sold and number of units in ending inventory. Then calculate cost of goods sold and ending inventory using (a) specific identification, then (b) average cost, then (c) FIFO, and finally (d) LIFO. (Round the average cost per unit to the nearest cent. Round all final answers to the nearest whole dollar.) Number of units Data Table X Х Cost of goods sold Ending inventory Dec 1 Beginning inventory ... 15 Purchase 26 Purchase 9 units@ $ 165 $ 1,485 5 units @ 166 - $ 830 13 units @ 175 - $ 2,275 Print Done Enter any number in the edit fields and then click Check Answer. 7 parts remaining Clear All Check Answer

Answer 1

		Cost of Goods Sold	Ending Inventory
1.	Number of Units	16	11
2.	Specific Identification Method	$2,735	$1,855
3.	Average Cost	$2,720	$1,870
4.	FIFO	$2,665	$1,925
5.	LIFO	$2,773	$1,817

Working Notes -

1. Number of Units Sold = Total number of units available for sale - Units on hand
   = ( 9 + 5 + 13) - 11
   = 27 - 11
   = 16 units
   Number of Units in Ending Inventory = 11 units (given)
   
2. Specific Identification Method
   Ending Inventory = (7 units *$165) + ( 4 units * $175 )
   = $1,155 + $700
   = $1,855
   Cost of Goods Sold = (2 units * $165) + (5 units * $166) + (9units * $175)
   = $330 + $830 + $1,575
   = $2,735
3. Average Cost Method
   Cost of Goods Sold = 16 units * $170 = $2,720
   Ending Inventory = 11 units * $170 = $1,870
   Average Cost per unit = [(9 units * $165) + (5 units * $166) + (13 units * $175)] / ( 9 + 5 + 13 ) units
   = $4,590 / 27 units
   = $170 per unit
4. FIFO
   Cost of Goods Sold = (9 units * $165) + (5 units * $166) + (2 units * $175)
   = $1,485 + $830 + $350
   = $2,665
   Ending Inventory = 11 units * $175
   = $1,925
5. LIFO
   Cost of Goods Sold = (13 units * $175) + (3 units * $166)
   = $2,275 + $498
   = $2,773
   Ending Inventory = ( 9 units * $165) + ( 2 units * $166)
   = $1,485 + $ 332
   = $1,817