Question

Carlson Auto Dealers Inc. sells a handmade automobile as its only product. Each automobile is identical; however, they can be distinguished by their unique ID number. At the beginning of 2018, Carlson had three cars in inventory, as follows: Car ID 203 207 210 Cost $102,000 102,000 105,000 During 2018, each of the three autos sold for $132,000. Additional purchases (listed in chronological order) and sales for the year were as follows: Car ID 211 212 213 214 215 216 217 218 219 Cost $102,000 102,000 103,500 105,000 108,000 106,500 111,000 108,300 114,000 Selling Price $ 132,000 135,000 not sold 138,000 142,500 not sold 147,000 148,500 not sold Required: 1. Calculate 2018 ending inventory and cost of goods sold assuming the company uses the specific identification inventory method. 2. Calculate ending inventory and cost of goods sold assuming FIFO and a periodic inventory system. 3. Calculate ending inventory and cost of goods sold assuming LIFO and a periodic inventory system. 4. Calculate ending inventory and cost of goods sold assuming the average cost method and a periodic inventory system.

Answer 1

Answer

• Cost of goods available for sale
  = Ending Inventory + Cost of Goods Sold.
• Take any correct answer of yours.
  Lets take FIFO:
  Ending Inventory + Cost of Goods Sold = Cost of Goods available for sale
  $ 333300 + $ 936000
  = $ 1,269,300
• The total UNDER every method for Ending Inventory + Cost of Goods Sold will be $ 1,269,300
• Hence, Cost of Goods Sold under AVERAGE METHOD
  = $ 1269300 - $ 317325
  = $ 951,975

	Specific Identification	FIFO	LIFO	Average Method
Ending Inventory	$324,000	$333,300	$309,000	$317,325
Cost of Goods Sold	$945,300	$936,000	$960,300	$951,975