Question

Please show all supporting computations. Points will be deducted if you do not now your work During June, the following changes in the quantity of an inventory item took place: June 1 14 24 8 10 29 Balance Purchased Purchased Sold Sold Sold 1,400 units @ $24 800 units @ $36 700 units @ $30 400 units @ $50 850 units @ $40 650 units @ $44 Assuming periodic inventories are maintained, what is the cost of the ending inventory and the cost of goods sold for this item under each of the following methods? (2 points) (a) Average cost 1) the value of the ending inventory 2) the cost of goods sold (b) FIFO 1) the value of the ending inventory 2) the cost of goods sold

Answer 1

1.

		Cost of Goods Available for Sale
		Quantity	Unit Cost	Amount
Jun-01	Beginning Inventory	1400	$         24.00	$    33,600.00
Jun-14	Purchase	800	$         36.00	$    28,800.00
Jun-24	Purchase	700	$         30.00	$    21,000.00
	Total	2900		$    83,400.00

a.
Average Cost per unit = $83400 / 2900 = $28.76 per unit
Units sold = 400+850+650 = 1900 units
Ending Inventory units = 2900 - 1900 = 1000 units

Ending Inventory = 1000 x $28.76 = $28760
Cost of Goods Available = $83400 - $28760 = $54640

b. FIFO
Units purchased first are sold first

		Cost of Goods Available for Sale			Cost of Goods Sold			Ending Inventory
		Quantity	Unit Cost	Amount	Quantity	Unit Cost	Amount	Quantity	Unit Cost	Amount
Jun-01	Beginning Inventory	1400	$         24.00	$    33,600.00	1400	$    24.00	$   33,600.00
Jun-14	Purchase	800	$         36.00	$    28,800.00	500	$    36.00	$   18,000.00	300	$    36.00	$ 10,800.00
Jun-24	Purchase	700	$         30.00	$    21,000.00				700	$    30.00	$ 21,000.00
	Total	2900		$    83,400.00	1900		$   51,600.00	1000		$ 31,800.00

Perpetual LIFO

		Cost of Goods Available for Sale			Cost of Goods Sold			Ending Inventory
		Quantity	Unit Cost	Amount	Quantity	Unit Cost	Amount	Quantity	Unit Cost	Amount
Jun-01	Beginning Inventory	1400	$         24.00	$    33,600.00				1400	$    24.00	$    33,600.00
Jun-08	Sales				400	$    24.00	$     9,600.00	1000	$    24.00	$    24,000.00
Jun-10	Sales				850	$    24.00	$   20,400.00	150	$    24.00	$       3,600.00
Jun-14	Purchase	800	$         36.00	$    28,800.00				150	$    24.00	$       3,600.00
								800	$    36.00	$    28,800.00
Jun-24	Purchase	700	$         30.00	$    21,000.00				150	$    24.00	$       3,600.00
								800	$    36.00	$    28,800.00
								700	$    30.00	$    21,000.00
Jun-29	Sales				650	$    30.00	$   19,500.00	150	$    24.00	$       3,600.00
								800	$    36.00	$    28,800.00
								50	$    30.00	$       1,500.00
	Total	2900		$    83,400.00	1900		$   49,500.00	6150		$    33,900.00