Question

the cos SERIAL PROBLEM: KATE'S CARDS 1 through 5.) (Note: This is a continuation of the Serial Problem: Kate's Cards from Chapters As expected, the holiday season was very busy for Kate and her greeting card company. In fact, most of her supplies were fully depleted by year-end, necessitating a restocking of inventory. Assume that Kate uses the periodic method of accounting for inventory and that her January beginning inventory was $0. The following transactions occurred for Kate's Cards during January of the New Year: SP6. Kate's Cards Purchases Total Cost Unit Cost Units Jan. 10 $3.00 per unit $3.50 per unit $4.00 per unit $1,200 400 Jan. 17 500 1,750 1,200 Jan. 23 300 Total... 1,200 $4,150 Sales Jan. 15 360 Jan. 21 420 Jan. 27 380 Total 1,160 Required Calculate the company's cost of goods sold and value of ending inventory for the month of Janu- ary using (1) FIFO, (2) LIFO, and (3) the weighted-average cost method. Round the cost per unit to 3 decimal places and round your final answers to the nearest dollar. b. a. If the net realizable value of Kate's inventory is $4.00 per unit on January 31, what value should be reported for her ending inventory on the January 31 balance sheet under each of the three inventory costing methods?

Answer 1

a.

Ending inventory units = 1,200 - 1,160 = 40

FIFO:

Ending inventory = 40 * $4 = $160

Cost of goods sold = $4,150 - 160 = $3,990

LIFO:

Ending inventory = 40 * $3 = $120

Cost of goods sold = $4,150 - 120 = $4,030

Weighted average cost :

Average cost per unit = $4,150 / 1,200 = $3.458

Ending inventory = 40 * $3.458 = $138

Cost of goods sold = 1,160 * $3.458 = $4,011

b.

	FIFO	LIFO	Weighted average
Net realizable value (40*$4)	$160	$160	$160
Ending inventory (Cost)	160	120	138
Ending inventory reported on balance sheet (NRV or Cost whichever is less)	$160	$120	$138