Question

Problem 6-02A a, b1-62, < (Video) Sunland Distribution markets CDs of the performing artist Unique. At the beginning of October, Sunland had in beginning inventory 2,000 of Unique's CDs with a unit cost of $5. During October, Sunland made the following purchases of Unique's CDs. Oct. 3 2,500 $6 Oct. 192,000 $8 Oct. 93,500 $7 Oct. 254,000 $9 During October 10,750 units were sold. Sunland uses a periodic Inventory system. Determine the cost of goods available for sale. Cost of goods available for sales LINK TO TEXE Calculate cost per unit. (Round answer to decimal places 1.9 2.25.) Cost per unit TOTEKE

Answer 1

As per below calculation we can see answer is different method as FIFO method, LIFO method and Average method because of as per FIFO method inventory to issued from first purchase whereas per LIFO method goods sales from last purchase per weighted average method material issued to production at Average cost of goods available.

• Cost of Goods available for Sales

Cost of Goods available for Sales

Transaction	Units	Cost per unit	Total
Beginning Inventory Oct. 1	2,000	$ 5	$ 10,000
Purchase, Oct. 3	2,500	$ 6	$ 15,000
Purchase, Oct. 9	3,500	$ 7	$ 24,500
Purchase, Oct. 19	3,000	$ 8	$ 24,000
Purchase, Oct. 25	4,000	$ 9	$ 36,000
Total Goods available for Sale	15,000		$ 1,09,500

Cost per unit

As per information provided cost per unit of average cost of goods available for sale

Cost per Unit = Total cost of Goods available for sales / Total numbers of Units

                       = $ 1,09,500 / 15,000 units

                       = $ 7.30 per unit cost

• Find out Ending Inventory and Cost of Goods Sold

	FIFO	LIFO	Weighted average
Ending Inventory	$ 38,000	$ 23,500	$ 31,025
Cost of Goods Sold	$ 71,500	$ 86,000	$ 78,475

Supported Calculation

• Ending Inventory in Units

Total units available	15,000 units
Less : No. of units sold	10,750 units
Ending inventory	4,250 units

FIFO ( Periodic method )
Transaction	Units	Cost per unit	Total
Beginning Inventory Oct. 1	2,000	$ 5	$ 10,000
Purchase, Oct. 3	2,500	$ 6	$ 15,000
Purchase, Oct. 9	3,500	$ 7	$ 24,500
Purchase, Oct. 19	3,000	$ 8	$ 24,000
Purchase, Oct. 25	4,000	$ 9	$ 36,000
Total Goods available for Sale	15,000		$ 1,09,500
Cost of Goods Sold
From Beginning Inventory Oct. 1	2,000	$ 5	$ 10,000
From Purchase, Oct. 3	2,500	$ 6	$ 15,000
From Purchase, Oct. 9	3,500	$ 7	$ 24,500
From Purchase, Oct. 19	2,750	$ 8	$ 22,000
Total Cost of Goods Sold	10,750		$ 71,500
Ending Inventory
From Purchase, Oct. 19	250	$ 8	$ 2,000
From Purchase, Oct. 25	4,000	$ 9	$ 36,000
Total Ending Inventory	4,250		$ 38,000

LIFO ( Periodic method )
Transaction	Units	Cost per unit	Total
Beginning Inventory Oct. 1	2,000	$ 5	$ 10,000
Purchase, Oct. 3	2,500	$ 6	$ 15,000
Purchase, Oct. 9	3,500	$ 7	$ 24,500
Purchase, Oct. 19	3,000	$ 8	$ 24,000
Purchase, Oct. 25	4,000	$ 9	$ 36,000
Total Goods available for Sale	15,000		$ 1,09,500
Cost of Goods Sold
From Purchase, Oct. 25	4,000	$ 9	$ 36,000
From Purchase, Oct. 19	3,000	$ 8	$ 24,000
From Purchase, Oct. 9	3,500	$ 7	$ 24,500
From Purchase, Oct. 3	250	$ 6	$ 1500
Total Cost of Goods Sold	10,750		$ 86,000
Ending Inventory
From Beginning Inventory Oct. 1	2,000	$ 5	$ 10,000
From Purchase, Oct. 3	2,250	$ 6	$ 13,500
Total Ending Inventory	4,250		$ 23,500

Weighted Average Cost ( Periodic method )
Transaction	Units	Cost per unit	Total
Beginning Inventory Oct. 1	2,000	$ 5	$ 10,000
Purchase, Oct. 3	2,500	$ 6	$ 15,000
Purchase, Oct. 9	3,500	$ 7	$ 24,500
Purchase, Oct. 19	3,000	$ 8	$ 24,000
Purchase, Oct. 25	4,000	$ 9	$ 36,000
Total Goods available for Sale	15,000		$ 1,09,500
Total Cost of Goods Sold	10,750	$ 7.30	$ 78,475
Ending Inventory	4,250	$ 7.30	$ 31,025

       As per weighted average method goods to sold average cost of total

       inventory available for sales as a following solution.

Weighted average Cost per unit               = Total Cost of Goods available / No. Of units for sales               = $ 1,09,500 / 15,000 units                  = $ 7.30 per unit cost

1 ) Which Cost flow show highest inventory amount in Balance sheet ?

   In the Balance sheet show ending inventory at the end of year.

   So, FIFO Method produced highest inventory amount $ $ 38,000

Because of in this method goods left from the last purchased which was recorded nearby current market price.

2) Which Cost flow show highest Cost of goods sold amount in Income statement?

      In the income statement show current year cost of goods sold.

So, LIFO Method produced highest Cost of goods sold amount $ 86,000.

Because of in this method goods sold from the last purchased which was recorded nearby current market price.