Question

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Sport Box sells a wide variety of sporting equipment The following is information on the purchases and sales of their top selling hockey stick. The hockey stick sells for $130 an had transactions as follows: 1. Mar 1st beginning inventory 5 units at $30 per unit 2. Mar 3rd sold 3 units 3. Mar 6th purchased inventory 30 units at $40 per unit 4. Mar 17th sold 20 units 5. Mar 23rd purchased inventory 25 units at $50 per unit 6. Mar 31st sold 30 units Required: Use the information above to answer the questions below for First In First Out (FIFO) and Moving Weighted Average (MWA) inventory costing methods ROUND ALL ANSWERS TO 2 DECIMAL PLACES What is the cost of Goods Sold for the Mar 3rd sale under FIFO inventory costing? Answer What is the cost of Goods Sold for the Mar 17th sale under FIFO inventory costing? Answer

Answer 1

solution:

A. FIFO METHOD UPTO 3RD MARCH

	PURCHASE(RECEIPT)	SALE	BALANCE
Date	Qty	rate	amount	Qty	rate	amount	Qty	rate	amount
MARCH 1ST (OPENING BALANCE)	5	30	150				5	30	150
MARCH 3				3	30	90	2	30	60
TOTAL			150			90			60

total cost of purchase and begining invdentory at 3rd march = 150

Total units available for sale = 5

Average price(150 /5) = 30

	FIF0	MOVING AVG. METHOD
Ending inventory ( 3rd march)	60	60 (30 x2 )
cost of goods sold( 3rdmarch)	90	90 (30 x3)

B.FIFO METHOD UPTO 17 MARCH

	PURCHASE(RECEIPT)	SALE	BALANCE
Date	Qty	rate	amount	Qty	rate	amount	Qty	rate	amount
MARCH 1ST (OPENING BALANCE)	5	30	150				5	30	150
MARCH 3				3	30	90	2	30	60
MARCH 6	30	40	1200				2	30	60
							30	40	1200
MARCH 17				2	30	60
				18	40	720	12	40	480
TOTAL			1350			870			480

cogs for march 17 sale

using FIFO METHOD = 2X30 = 60

ADD : 18X40 =720

TOTAL = 780

using moving average method cost of goods sold=

total cost of purchase and begining invdentory at 17 MARCH =1350

Total units available for sale = 35

average price = 38.57

	FIF0	MOVING AVG. METHOD
Ending inventory ( 17th march)	480	303.31 (38.57 x12 )
cost of goods sold( 17st march)	870 (90 + 60+720)	887.11 (38.57 x23)

C. FIFO METHOD FOR 31ST MARCH

	PURCHASE(RECEIPT)	SALE	BALANCE
Date	Qty	rate	amount	Qty	rate	amount	Qty	rate	amount
MARCH 1ST (OPENING BALANCE)	5	30	150				5	30	150
MARCH 3				3	30	90	2	30	60
MARCH 6	30	40	1200				2	30	60
							30	40	1200
MARCH 17				2	30	60
				18	40	720	12	40	480
MARCH 23	25	50	1250				12	40	480
							25	50	1250
MARCH 31				12	40	480
				18	50	900	7	50	350
TOTAL	60		2600			2250			350

TOTAL COST OF PURCHASE AND OPENING BALANCE =2600

TOTAL UNIT AVAILABLE FOR SALE =60

AVERAGE PRICE = 43.33

	FIF0	MOVING AVG. METHOD
Ending inventory ( 31st march)	350	303.31 (43.33 x7 )
cost of goods sold( 31st march)	2250	2296.49 (43.33 x53)

caluculation of groos profit for march

	FIF0	MOVING AVG. METHOD
sale(53 x 130 )	6890	6890
less : cogs	2250	2296.49
gross profit	4640	4593.51

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