Question

1. Mojo Industries tracks the number of units purchased and sold throughout each accounting period but applies its inventory costing method at the end of each period, as if it uses a periodic inventory system. Assume its accounting records provided the following information at the end of the accounting period, January 31. The inventory's selling price is $9 per unit. Transactions Unit Cost Units Total Cost Inventory, January 1$ 2.50 250 $ 625 Sale, January 10 (200) Purchase, January 12 3.00 300 900 Sale, January 17 (150) Purchase, January 26 4.00 80 320 Assume that for Specific identification method the January 10 sale was from the beginning inventory and the January 17 sale was from the January 12 purchase. Compute the amount of goods available for sale, ending inventory and cost of goods sold at January 31 under each of the following inventory costing methods: Cost of Goods Available Ending inventory for Sale Cost of Goods Sold Weighted average First In, First Out List In, First Out Specific Identification

Can someone please explain how to calculate the ending inventory and cost of goods sold for each of these four and where the numbers come from!

Answer 1

Units Determine the cost of Goods available for sale : Date January 1. January 12 January 26. Activity Beginning Inventory Purchases Purchases per Unit Cost 250.00 $ 300.00 $ 80.00 $ Total Cost 625.00 900.00 $ 320.00 4.00 Cost of Goods available for sale $ 1,845.00 Determination of Ending Inventory and cost of Goods sold : Under FIFO Method : Units Date January 1. January 12 January 26. Activity Beginning Inventory Purchases Purchases per Unit Cost 250.00 $ 300.00 $ 80,00 $ Total Cost 2.50 $ 625.00 3.00 $ 900.00 4.00 $ 320,00 Working note : No of Units available Less : No of units sold No of Units in Inventory 630.00 -350.00 280.00 Cost of Goods available for sale $ 1,845.00 Less : Ending Inventory of 280 Units 80 units @ $4 200 units @ $3 320.00 600.00 $ 920.00 Cost of Goods sold $ 925.00 Note : Under FIFO Method, The Goods which are purchased first will be sold first Therefore, Ending Inventory Consists of goods which are purchased last Under Weighted Avg Method : Units Date January 1. January 12 January 26. Activity Beginning Inventory Purchases Purchases per Unit Cost 250.00 $ 300.00 $ 80.00 $ Total Cost 2.50 $ 625.00 3.00 $ 900,00 4.00 $ 320,00 $ 1,845.00 Cost of Goods available for sale Weighted Avg Cost Per unit = 1845/630 2.9286 Less : Ending Inventory of 280 Units 280 units @ $2.9286 820 Cost of Goods sold 1,025

Under LIFO Method : Units Date January 1. January 12 January 26. Activity Beginning Inventory Purchases Purchases per Unit Cost 250.00 $ 300.00 $ 80.00 $ 2.50 3.00 4,00 Total Cost $ 625.00 $ 900.00 $ 320,00 Cost of Goods available for sale $ 1,845.00 Less : Ending Inventory of 280 Units 250 units @ $2.5 30 Units @ $3 625.00 90.00 $ 715.00 Cost of Goods sold $ 1,130.00 Note : Under LIFO Method, The Goods which are purchased last will be sold first Therefore, Ending Inventory Consists of goods which are purchased first Under Specific identification Method : Units Date January 1. January 12 January 26. Activity Beginning Inventory Purchases Purchases per Unit Cost 250.00 $ 300.00 $ 80.00 $ 2.50 3.00 4.00 Total Cost $ 625.00 $ 900.00 $ 320.00 Cost of Goods available for sale $ 1,845.00 Less : Cost of goods sold 200 units @ $2.5 150 Units @ $3 500.00 450.00 $ 950.00 Ending Inventory $ 895.00 Weighted Average FIFO Cost of Goods available for sale Ending Inventory 1,845.00 $ 820 1,845.00 $ 920.00 1,845.00 $ 715.00 1,845.00 $ 895.00 Cost of goods sold $ 1,024.99 $ 925.00 $ 1,130.00 $ 950.00 " LIFO Specific Identification