Question

Cuppie Cake Cakery uses the perpetual method for recognizing inventory. In August 2016, the following took place:

Aug 1, Beginning Inventory 1,100 units @ $25 = $27,500

Aug, 15 Purchased 800 units @ $36 = 28,800

Aug, 25 Purchased 700 units @ $30 = 21,000

Aug, 9 Sold 500 units @ $50 = $25,000

Aug, 18 Sold 300 units @ $49 = $14,700

Aug, 29 Sold 600 units @ $54 = $32,400

As of Aug, 29, what is the Cost of Good Sold using LIFO, FIFO recognised in the journal entry? What is the moving average cost per unit of ending inventroy? Show all calculations and explain your answers.

Answer 1

Cost of goods sold under FIFO Method:

opening inventory = 1100 units

aug 15 purchase= 800 units

total units= 1900 units

total sales= 500+300+600=1400 units

so 1400 units which is sold include units of begining inventory and units purchased on aug 15.

so cost of goods sold= (1100*25)+(300*36)= $ 38300

Cost of goods sold under LIFO Method:

units sold= 500+300+600=1400 units

these 1400 units is sold from unit purchased on aug 25 and unit purchased on aug 15

so cost of goods sold=600*30+100*30+200*36+500*36=$ 43200