Question

1. Spooky Inc. had the following information related to its inventory during 2012.

Beginning inventory          200 units @ $35

March 4 Purchase              800 units @$37

May 15 Sale                       500 units @$60

August 29 Purchase           600 units @$39

October 19 Sale                 700 units @$60

What is the amount of cost of goods sold and ending inventory which should be reported on the 2012 financial statements assuming Spooky uses the periodic weighted average method? Please show work.

2.

Simple Works had the following information related to its inventory during 2012.

Beginning inventory 200 units @ $35

Feb. 28 Purchase 800 units @$37

April 29 Sale 500 units @$60

September 18 Purchase   600 units @$39

November 24 Sale 700 units @$60

What is the amount of cost of goods sold and ending inventory which should be reported on the 2012 financial statements assuming Simple Works uses the periodic LIFO method?

3. At the beginning of the quarter, World Company had supplies of $15,400 recorded. During the quarter, World purchased an additional $35,200 in supplies. At the end of the month, World had $13,900 of supplies on hand. The correct adjusting entry at the end of the quarter is? Please show work

Answer 1

1)

	Unit	Unit Cost	Total Cost
Beginning inventory	200	35	7000
Purchase	800	37	29600
Purchase	600	39	23400
Total	1600		60000

Cost of goods sold = 60000/1600*1200 = 45000

Cost of ending inventory = 60000/1600*400 = 15000

b) Cost of ending inventory under LIFO method = (200*35+200*37) = 14400

Cost of goods sold = 60000-14400 = 45600

c)Adjusting entry :

Date	account and explanation	debit	credit
	Supplies expense (15400+35200-13900)	36700
	Supplies		36700
	(To record supplies adjusted)