Question

Required information M7-20 to 22 (Supplement 7A) Calculating Cost of Goods Sold and Ending Inventory under Perpetual FIFO, LIFO, and Weighted Average Cost [LO 7-S1] In its first month of operations, Literacy for the Illiterate opened a new bookstore and bought merchandise in the following order: (1) 300 units at $4 on January 1, (2) 450 units at $7 on January 8, and (3) 950 units at $8 on January 29. Assuming 1,100 units are on hand at the end of the month. M7-21 (Supplement 7A) Calculating Cost of Goods Sold and Ending Inventory under Perpetual LIFO [LO 7-S1] Calculate the cost of goods available for sale, cost of goods sold, and ending inventory under the LIFO. Assume perpetual inventory system and sold 600 units between January 9 and January 28. (Round your intermediate calculations to 2 decimal places.) LIFO Goods Available for Sale Cost of Goods Sold Ending Inventory

Answer 1

Calculation of Cost of goods available for sale

Date	Units	Unit cost	Total cost
January 1	300	$4	$1,200
January 8	450	$7	$3,150
January 29	950	$8	$7,600
Total	1,700		$11,950

Cost of goods available for sale = $11,950

Calculation of Cost of goods sold

Date	Units	Unit cost	Total cost
January 1	150	$4	$600
January 8	450	$7	$3,150
Total	600		$3,750

Cost of goods sold = $3,750

Ending inventory = Cost of goods available for sale - Cost of goods sold

= 11,950 - 3,750

= $8,200

Cost of goods available for sale	$11,950
Cost of goods sold	$3,750
Ending inventory	$8,200

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