Question

Sunland Company markets CDs of numerous performing artists. At the beginning of March, Sunland had in beginning inventory 2,800 CDs with a unit cost of $7. During March, Sunland made the following purchases of CDs.

March 5		2,200		@		$8		March 21		5,000		@		$10
March 13		3,800		@		$9		March 26		2,200		@		$11

During March 11,500 units were sold. Sunland uses a periodic inventory system.

Determine the cost of goods available for sale.

The cost of goods available for sale

$

Calculate Average Cost. (Round answer to 3 decimal places, e.g. 5.125.)

Average Cost

$enter an average cost in dollars

Determine (1) the ending inventory and (2) the cost of goods sold under each of the assumed cost flow methods (FIFO, LIFO, and average-cost). (Round answers to 0 decimal places, e.g. 125.)

		FIFO		LIFO		AVERAGE-COST
The ending inventory		$		$		$
The cost of goods sold		$		$		$

Answer 1

	Unit	Unit Cost	Total Cost
Beginning inventory	2800	7	19600
Purchase 1	2200	8	17600
Purchase 2	3800	9	34200
Purchase 3	5000	10	50000
Purchase 4	2200	11	24200
Total	16000		145600

Determine the cost of goods available for sale.

The cost of goods available for sale

$145600

Calculate Average Cost. (Round answer to 3 decimal places, e.g. 5.125.)

Average Cost

$145600/16000 = 9.10

Determine (1) the ending inventory and (2) the cost of goods sold under each of the assumed cost flow methods (FIFO, LIFO, and average-cost). (Round answers to 0 decimal places, e.g. 125.)

		FIFO		LIFO		AVERAGE-COST
The ending inventory		2300*10+2200*11 = 47200		(2800*7+1700*8) = 33200		4500*9.1 = 40950
The cost of goods sold		$145600-47200 = 98400		$145600-33200 = 112400		$104650