Question

Oriole Company sells an ultra-lightweight snowboard that is considered to be one of the best on the market. Information follows for Oriole’s purchases and sales of the ultra-lightweight snowboard in October:

Unit Purchase Price Unit Sales Price Date Transaction Units Oct. 1 Beginning inventory $298 10 Purchase 305 Sale $475 13 Purchase 311 25 Sale 485 27 Purchase 319

Answer 1

Periodic Method Average Cost Method : Date No of units Unit cost Total Cost Activity 01-Oct Beginning Inventory purchase purchase $298.00 $ Purchases 25 7,450.00 110 10-Oct Less : Sales 30 $305,00 9,150.00 -87 13-Oct $ 10,885.00 $311.00 Ending Inventory 35 23 27-Oct $319.00 purchase 6,380.00 20 S 33,865.00 Cost of goods available for sale Average Cost per Unit S33865 /110 307.86 Less Cost of Goods sold 87 units$307.86 $ 26,784 Ending Inventory Cost of goods available for sale Cost of goods sold 7,081 Note Avg cost method assumes that goods are sold at avg cost per unit Therefore, Ending inventory will also be valued at avg cost per unit

Periodic Method FIFO Method: No of units Unit cost Total Cost Date Activity $298.00 7,450.00 Beginning Inventory purchase 01-Oct Purchases 25 110 $305.00 $ 10-Oct Less: Sales 30 9,150.00 -87 13-Oct $311.00 $ 10,885.00 Ending Inventory purchase 35 23 purchase 6.380.00 27-Oct $319.00 $ 20 S 33,865.00 Cost of goods available for sale less: Ending Inventory 23 units 20 units $319 6,380 $ 311 3 units 933,00 Cost of Ending Inventory 7,313 Cost of goods sold Cost of goods available for sale - ending inventory 26,552 Note : FIFO Method assumes that goods which are purchased first will be sold first SO. Ending inventory consists of units which are purchased last

Perpetual System Weighted Average Method Cost of goods sold Purchases Inventory Date unit cost Total cost Total cost Quantity unit cost 25 $298.00 7,450.00 total cost Quantity Quantity unit cost Oct-01 30 $305.00 9,150.00 25 $298.00 $7,450.00 30 $305.00 $9,150.00 55 $301.82 $16,600.00 Oct-10 13 $301.82 42 $301.82 $ Oct-12 12,676 3,924 35 $311.00 $10,885.00 13 $301.82 $ 3,924 Oct-13 35 $311.00 $10,885.00 48 $308.51 14,809 45 $308.51 $ 3 $308.51 $ Oct-25 13,883 926 20 $319.00 $6,380.00 3 $308.51 Oct-27 926 20 $319.00 6,380.00 $ $ 7,306 26,559 87 23

FIFO Method Perpetual inventory Record Purchases Cost of goods sold Inventory Date Quantity unit cost total cost 25 $298.00 S 7,450.00 Quantity unit cost Total cost Quantity unit cost Total cost Oct-01 Oct-10 30 S 305.00 S 9,150.00 25 $298.00 S 7,450.00 30 S305.00 $ 9,150.00 Oct-12 25 $298.00 $ 7,450.00 13 $305.00 $ 3,965.00 17 $305.00 S 5,185.00 35 S 311.00 $10,885.00 13 S305.00 S 3,965.00 Oct-13 35 $311.00 $10,885.00 13 $305.00 S 3,965.00 Oct-23 3 S311.00 S 933.00 32 $311.00 9,952.00 20 S 319.00 $6,380.00 3 S311.00S Oct-27 933.00 20 $319.00 $ 6,380.00 $ 7,313.00 $26,552.00 87 23