Question

1.

Lauer Corporation uses the periodic inventory system and has provided the following information about one of its laptop computers:

Date	Transaction	Number of Units	Cost per Unit
	1/1	100	$800
5/5	Purchase	200	$900
8/10	Purchase	300	$1,000
10/15	Purchase	200	$1,100

During the year, Lauer sold 750 laptop computers.

(a) What was ending inventory and cost of goods sold using the FIFO cost flow assumption?

        (b) What was ending inventory and cost of goods sold using the LIFO cost flow assumption?

(c) What is ending inventory and cost of goods sold using the average cost method?

Answer 1

Correct Answer

	FIFO	LIFO	Weighted Average
Cost of Ending Inventory	$       55,000	$      40,000	$            48,750.0
Cost of Goods Sold	$   7,25,000	$   7,40,000	$        7,31,250.0

Working:

Cost of Goods Available for sale
	Units	Cost per unit	value
Beginning Inventory	100	$      800.00	$            80,000.0
Purchases	200	$      900.00	$        1,80,000.0
Purchases	300	$         1,000	$      3,00,000.00
Purchases	200	$         1,100	$        2,20,000.0
Total	800		$            7,80,000

	FIFO
A	Total Units Available for sale			800			$            7,80,000
	Units Sold			750
	Ending Inventory Units			50
	Valuation
	Cost of Goods Sold		100		$                800.00		$         80,000.00
			200		$                900.00		$            1,80,000
			300		$            1,000.00		$      3,00,000.00
			150		$            1,100.00		$      1,65,000.00
B	Cost of Goods Sold		750	units			$            7,25,000
A-B	Ending Inventory		50	units			$               55,000

	LIFO
A	Total Units Available for sale			800			$            7,80,000
	Units Sold			750
	Ending Inventory Units			50
	Valuation
	Cost of Goods Sold		200		$            1,100.00		2,20,000.00
			300		$            1,000.00		3,00,000.00
			200		$                900.00		1,80,000.00
			50		$                800.00		40,000.00
B	Cost of Goods Sold		750	units			$      7,40,000.00
A-B	Ending Inventory		50	units			$         40,000.00

	Weighted Average
A	Total Units Available for sale			800			$      7,80,000.00
	Units Sold			750
	Ending Inventory Units			50
	Valuation
	Cost of Goods Sold		750		$             975.000		$      7,31,250.00
B	Cost of Goods Sold		750	units			$      7,31,250.00
A-B	Ending Inventory		50	units			$         48,750.00

Weighted Average Cost Per unit
Units		(A)	800
Total Cost		(B)	$   7,80,000
Average Cost		(C=B/A)	$         975.0

End of Answer.

Thanks