Question

Seminole Company began the year with 20,500 units of product in its January 1 inventory costing $15.10 each. It made successive purchases of its product during the year as follows. The company uses a periodic inventory system. On December 31, a physical count reveals that 36,000 units of its product remain in inventory. Mar. 7 29,000 units @ $18.10 each May 25 31,000 units @ $22.10 each Aug. 1 21,000 units @ $24.10 each Nov. 10 33,500 units @ $27.10 each Required: 1. Compute the number and total cost of the units available for sale during the year. 2. Compute the amounts assigned to ending inventory and the cost of goods sold using (a) FIFO, (b) LIFO, and (c) weighted average..

Answer 1

Requirement 1

Total units available for sale =114500 units

Total cost of units available for sale = $2,623,950

Requirement 2

	Cost of Ending inventory	Cost of goods sold
FIFO	$ 968,100.00	$     1,655,850.00
LIFO	$ 679,600.00	$     1,944,350.00
Weighted average	$ 824,997.38	$     1,798,952.62

Alternate answer for weighted average

	Cost of Ending inventory	Cost of goods sold
Weighted average	$ 825,120.00	$     1,798,830.00

Working

	Units	Cost per unit	value
Beginning Balance			$ 0
Purchases
	29000	$                   18.10	$ 524,900
	31000	$                   22.10	$ 685,100
	21000	$                   24.10	$ 506,100
	33500	$                   27.10	$ 907,850
Total	114500		$ 2,623,950

.

Average Cost of Inventory
Units	(A)	114500
Total Cost	(B)	$ 2,623,950
Average Cost	(C=B/A)	$                   22.92

.

FIFO
Total Units Avalable for sale		114500
Units Sold		78500
Closing Stock in Units		36000
Valuation
Ending Inventory	33500	@	$             27.10	$ 907,850
	2500	@	$             24.10	$ 60,250
Value Of Ending Inventory				$         968,100
Cost of Goods sold				$      1,655,850

.

LIFO
Total Units Avalable for sale		114500
Units Sold		78500
Closing Stock in Units		36000
Valuation
Ending Inventory	29000	@	$             18.10	$ 524,900
	7000	@	$             22.10	$ 154,700
Value Of Ending Inventory				$         679,600
Cost of Goods sold				$      1,944,350

.

Weighted Average method
Total Units Avalable for sale		114500
Units Sold		78500
Closing Stock in Units		36000
Valuation
Ending Inventory	36000	@	$             22.92	$         825,120
Value Of Ending Inventory				$         825,120
Cost of Goods sold	(Total Purchase and opening stock Minus Closing Stock)			$ 1,798,830