Question

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Warnerwoods Company uses a perpetual inventory system. It entered into the following purchases and sales transactions for March.

Date

Activities

Units Acquired at Cost

Units Sold at Retail

Mar.

1

Beginning inventory

240

units

@ $53.80 per unit

Mar.

5

Purchase

295

units

@ $58.80 per unit

Mar.

9

Sales

400

units

@ $88.80 per unit

Mar.

18

Purchase

155

units

@ $63.80 per unit

Mar.

25

Purchase

290

units

@ $65.80 per unit

Mar.

29

Sales

270

units

@ $98.80 per unit

Totals

980

units

670

units

3. Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO, (c) weighted average, and (d) specific identification. For specific identification, the March 9 sale consisted of 135 units from beginning inventory and 265 units from the March 5 purchase; the March 29 sale consisted of 115 units from the March 18 purchase and 155 units from the March 25 purchase.

Answer 1

A) FIFO

  

	UNITS	RECIEPTS UNIT COST	TOTAL COST	ISSUES UNIT	UNIT COSTS	UNITS	BALANCE UNIT COST	TOTAL COST
OP BAL MARCH 1						240	53.80	12912
MAR 5	295	58.80	17346			295	58.80	17346
						535		30258
MAR 9				240 160	53.80 58.80
				400		135	58.80	7938
MARCH 18	155	63.80	9889			155	63.80	9889
						290		17827

MAR 25	290	65.80	19082			290	65.80	19082
						580		36909
MARCH 29				135 135	58.80 63.80
						20 290	63.80 65.80	1276 19082
								20358

B) LIFO

  

MAR I

OP STOCK 240 @ 53.80   

MAR 5

PURCHASE 295 @58.80

MARCH 9

SALES 295 @ 58.80

105 @ 53.80 SO TOTAL 400

INVENTORY BALANCE

135 @ 53.80

MARCH 18

PURCHASE 155@ 63.80

MARCH 25

PURCHASE 290@ 65.80

INVENTORY BALANCE

   135 @ 53.80

155@ 63.80

   290@ 65.80

MARCH 29

SALE 270 @ 65.80

INVENTORY BALANCE

  

135 @ 53.80 = 7263

155@ 63.80 = 9889

20 @ 65.80 = 1316

18468

  

c) weighted average

  

MAR I

OP STOCK 240 @ 53.80 = 12912

MAR 5

PURCHASE 295 @58.80 = 17346 W A = (12912+17346)/(240+295) = 56.56

MARCH 9

SALES 400

INVENTORY BALANCE

135 @ 56.56 = 7636

MARCH 18

PURCHASE 155@ 63.80 = 9889

MARCH 25

PURCHASE 290@ 65.80 = 19082 WA = (7636+9889+19082)/(135+155+290)=63.12

INVENTORY BALANCE = 580 @ 63.12

MARCH 29

SALE 270

INVENTORY BALANCE = 580-270

= 310 @63.12 = 19567.2

D) SPECIAL

MAR I

OP STOCK 240 @ 53.80   

MAR 5

PURCHASE 295 @58.80

MARCH 9

SALES 135@ 53.80

265 @ 58.80

INVENTORY BALNCE

105 @ 53.80

30@ 58.80

MARCH 18

PURCHASE 155@ 63.80

MARCH 25

PURCHASE 290@ 65.80

INVENTORY BALANCE   

105 @ 53.80

30@ 58.80

155@ 63.80

  290@ 65.80

MARCH 29

SALE 115 @63.80

155 @ 65.80

INVENTORY BALANCE

  

  

105 @ 53.80 = 5649

30@ 58.80 = 1764

40@ 63.80 = 2552

135@ 65.80 = 8883

18848