Analyzing the Effects of Four Alternative Inventory Methods (AP7-1)
Kirtland Corporation uses a periodic inventory system. At the end of the annual accounting period, December 31, 2012, the accounting records for the most popular item in inventory showed the following:
Transactions | Units | Unit Cost |
Beginning inventory. January 1. 2012 | 400 | $3,00 |
Transactions during 2012: |
|
|
a. Purchase. January 30 | 600 | 3,20 |
b. Purchase. May 1 | 460 | 3,50 |
c. Sale ($5 each) | (160) |
|
d. Sale ($5 each) | (700) |
|
Required:
Compute the amount of (a) goods available for sale. (b) ending inventory. and (c) cost of goods sold at December 31, 2012, under each of the following inventory costing methods (show computations and round to the nearest dollar):
1. Average cost (round the average cost per unit to the nearest cent).
2. First-in, first-out.
3. Last-in, first-out.
4. Specific identification, assuming that the first sale was selected two-fifths from the beginning inventory and three-fifths from the purchase of January 30, 2012. Assume that the second sale was selected from the remainder of the beginning inventory, with the balance from the purchase of May 1. 2012.
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