Question

Problem 2. A Company just starting business made the following four inventory purchases in June: Units Total Cost Unit Cost June 1 150 units $750 $5.00 June 10 200 units 1,200 6.00 June 15 100 units 630 6.30 June 28 100 units 690 6.90 $3,270 On June 16th the Company sold 200 units at a price of $10 each. Use the above information for parts a, b, and c. a> (14 points) Use the LIFO , Last In First Out, inventory flow and perpetual inventory method to value the ending inventory on June 30. SHOW YOUR WORK

Answer 1

Correct Answer:

Requirement 1: LIFO

Ending Inventory

350 units

$      2,040.00

Working:

	LIFO
A	Total Units Available for sale			550		$      3,270.00
	Units Sold			200
	Ending Inventory Units			350
	Valuation
	Cost of Goods Sold		100		$                           6.30	630.00
			100		$                           6.00	600.00
						-
B	Cost of Goods Sold		200	units		$      1,230.00
A-B	Ending Inventory		350	units		$      2,040.00

Requirement 2: FIFO

Ending Inventory

350 Units

$      2,220.00

Working:

	FIFO
A	Total Units Available for sale			550		$      3,270.00
	Units Sold			200
	Ending Inventory Units			350
	Valuation
	Cost of Goods Sold		150		$                           5.00	$          750.00
			50		$                           6.00	$          300.00
						$                   -
B	Cost of Goods Sold		200	units		$      1,050.00
A-B	Ending Inventory		350	units		$      2,220.00

Requirement 3: Weighted-Average

Ending Inventory

350 Units

$      2,123.33

Working:

	Weighted Average
A	Total Units Available for sale			550		$      3,270.00
	Units Sold			200
	Ending Inventory Units			350
	Valuation
	Cost of Goods Sold		200		$                           5.73	$      1,146.67
B	Total Cost of Goods Sold		200	units		$      1,146.67
A-B	Ending Inventory		350	units		$      2,123.33

Moving average cost
Date	Inventory balance	Total cost	Average cost for each units
01-Jun	150	$              750.00	$           5.0000
10-Jun	350	$          1,950.00	$           5.5714
15-Jun	450	$          2,580.00	$           5.7333
16-Jun	250	$          1,433.33	$           5.7333
28-Jun	350	$          2,123.33	$           6.0667

End of answer.

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