Question

Required information (The following information applies to the questions displayed below.) Laker Company reported the following January purchases and sales data for its only product. Units sold at Retail Units Acquired at Cost 145 units@ $7.00 = $1,015 105 units @ $16.00 Date Activities Jan. 1 Beginning inventory Jan. 10 Sales Jan. 20 Purchase Jan. 25 Sales Jan. 30 Purchase Totals 70 units@ $6.00 = 420 85 units @ $16.00 190 units@ $5.50 - 405 units 1,045 $2,480 190 units The Company uses a perpetual inventory system. For specific identification, ending inventory consists of 215 units, where 190 are from the January 30 purchase, 5 are from the January 20 purchase, and 20 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

1	Specific identification:
		Available for sale	Cost of goods sold	Ending inventory
	Purchase date	Activity		Units	Unit cost	Units sold	Unit cost	COGS	Ending inventory-units	Cost per unit	Ending inventory-cost
	Jan 1.	Beginning inventory		145	7	125	7	875	20	7	140
						(145-20)
	Jan 20.	Purchase		70	6	65	6	390	5	6	30
						(70-5)
	Jan 30.	Purchase		190	5.5				190	5.5	1045
				405		190		1265	215		1215
	Cost of ending inventory=$ 1215
	Cost of goods sold=$ 1265
2	Weighted average:
	Under weighted average inventory method,Inventory is valued at weighted average cost per unit
	Weighted average cost per unit=Total cost/Total quantity
		Goods purchased		Cost of goods sold	Inventory balance
	Date	Quantity	Unit cost	Total cost	Quantity	Unit cost	Total cost	Quantity	Unit cost	Total cost
	Jan 1.							145	7	1015
	Jan 10.				105 units sold as follows:			40	7	280
					105	7	735	(145-105)
	Jan 20.	70	6	420				110	6.36	700
								(40+70)	(700/110)	(280+420)
	Jan 25.				85 units sold as follows:			25	6.36	159
					85	6.36	541	(110-85)
	Jan 30.	190	5.5	1045				215	5.60	1204
								(190+25)	(1204/215)	(1045+159)
	Total						1276
	Cost of ending inventory=$ 1204
	Cost of goods sold=$ 1276
3	FIFO:
	Under FIFO method,Goods purchased first are sold first.
		Goods purchased		Cost of goods sold	Inventory balance
	Date	Quantity	Unit cost	Total cost	Quantity	Unit cost	Total cost	Quantity	Unit cost	Total cost
	Jan 1.							145	7	1015
	Jan 10.				105 units sold as follows:			40	7	280
					105	7	735	(145-105)

Jan 20. 70 6 420 40 7 280 70 6 420 Jan 25. 25 6 150 85 units sold as follows: 40 7 280 (70-45) 270 45 6 (85-40) Jan 30. 190 5.5 1045 25 6 150 190 5.5 1045 1285 Total Cost of ending inventory=150+1045=$ 1195 Cost of goods sold=$ 1285 4 LIFO: Under LIFO method, Goods purchased last are sold first. Goods purchased Cost of goods sold Unit Unit Total Date Quantity cost Total cost Quantity cost cost Jan 1. Inventory balance Unit Total Quantity cost cost 145 7 1015 Jan 10. 401 280 105 units sold as follows: 105 7 735 (145-105)

Jan 20. 70 6 420 40 70 7 6 280 420 Jan 25. 25 7 175 70 85 units sold as follows: 6 15 7 (85-70) 420 (40-15) 105 Jan 30. 190 5.5 1045 25 7 175 1045 190 5.5 1260 Total Cost of ending inventory=175+1045=$ 1220 Cost of goods sold=$ 1260