Question

Problem (15 points): Vaughn Company had a beginning inventory on May 1, of 400 units of Product A at a cost of $7 per unit. During May, the following purchases and sales were made. Purchases Sales May 6 375 units at $9 May 4 275 units 250 units at $10 300 units 300 units at $11 450 units 425 units at $13 225 units 1.350 1.250 Instructions: Compute the May 31 cost of ending inventory and May cost of goods sold under (a) Average Cost. (b) FIFO, and (c) LIFO. Provide appropriate supporting calculations. (a) Average - Ending Inventory = $ Cost of Goods Sold - $ 21 (b) FIFO - Ending Inventory - $ Cost of Goods Sold - (c) LIFO - Ending Inventory = $ Cost of Goods Sold - $

Answer 1

Vaughn Company
Date	Description	Quantity	Cost per units	Total cost	Units sold
01-May	Beginning Inventory	400	$                7.00	$   2,800.00
04-May	Sales				275
06-May	Purchases	375	$                9.00	$   3,375.00
08-May	Sales				300
14-May	Purchases	250	$             10.00	$   2,500.00
21-May	Purchases	300	$             11.00	$   3,300.00
22-May	Sales				450
24-May	Sales				225
28-May	Purchase	425	$             13.00	$   5,525.00
	Total	1750		$ 17,500.00	1250
Closing Inventory=(Beginning Inventory+Purchases-Sales)
Closing Inventory=(400+1350-1250)=500 units
Average Method
Unit Price=	Total cost/Total Units
Unit Price=	($17500/1750)
Unit Price=	$                                    10.00
	Average-Ending Inventory
	Unit	Rate	Total cost
Ending Inventory	500	10	$       5,000.00
	Average-Cost of goods sold
	Unit	Rate	Total cost
Cost of goods sold	1250	10	$     12,500.00
FIFO Ending Inventory
	Units	Rate	Total cost
28 May Purchase	425	$                       13.00	$       5,525.00
21 May purchase	75	$                       11.00	$           825.00
Total	500		$       6,350.00
FIFO-Cost of goods sold
	Units	Rate	Total cost
Beginning Inventory	400	$                          7.00	$       2,800.00
6th May purchase	375	$                          9.00	$       3,375.00
14 may purchase	250	$                       10.00	$       2,500.00
21 may purchase	225	$                       11.00	$       2,475.00
Total	1250		$     11,150.00
LIFO Ending Inventory
	Units	Rate	Total cost
28 may purchase	425	$                       13.00	$       5,525.00
Beginning Inventory	75	$                          7.00	$           525.00
Total	500		$       6,050.00
LIFO-Cost of goods sold
	Units	Rate	Total cost
21 may purchase	300	$                       11.00	$       3,300.00
14 may purchase	250	$                       10.00	$       2,500.00
6 may purchase	375	$                          9.00	$       3,375.00
Beginning Inventory	325	$                          7.00	$       2,275.00
	1250		$     11,450.00
Under LIFO Inventory method units purchased last is sold first,but in this case units purchased on 28th may after the last sale on 24th may so this purchase will be kept in the stock.
	Ending Inventory	Cost of goods sold
a) Average Method	5000	$               12,500.00
b)FIFO Method	6350	$               11,150.00
c ) LIFO Method	6050	$               11,450.00