Question

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Warnerwoods Company uses a periodic inventory system. It entered into the following purchases and sales transactions for March.

Date

Activities

Units Acquired at Cost

Units Sold at Retail

Mar.

1

Beginning inventory

100

units

@ $50.00 per unit

Mar.

5

Purchase

400

units

@ $55.00 per unit

Mar.

9

Sales

420

units

@ $85.00 per unit

Mar.

18

Purchase

120

units

@ $60.00 per unit

Mar.

25

Purchase

200

units

@ $62.00 per unit

Mar.

29

Sales

160

units

@ $95.00 per unit

Totals

820

units

580

units

For specific identification, the March 9 sale consisted of 80 units from beginning inventory and 340 units from the March 5 purchase; the March 29 sale consisted of 40 units from the March 18 purchase and 120 units from the March 25 purchase.

3. Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO, (c) weighted average, and (d) specific identification. (Round your average cost per unit to 2 decimal places.)

Answer 1

ENDING INVENTORY IN UNITS=100+400-420+120+200-160=240UNITS

A. FIFO VALUATION

ENDING INVENTORY VALUE=40UNITS*$60+200UNITS*62= $14800

B. LIFO VALUATION

ENDING INVENTORY VALUE = 80UNITS REMAINING FROM BEGINING INVENTORY+ 120 UNITS REMAINING FROM PURCHSE MADE ON MARCH 2018+40 UNITS REMAINING FROM PURCHASE MADE ON MARCH 2025

= 80*$50+120*$60+40*$62= $13680

C. WEIGHTED AVERAGE

ENDING INVENTORY VALUE = 240 (100*50+400*55+120*60+200*62)/820= $13639.02

D. SPECIFIC IDENTIFICATION

ENDING INVENTORY VALUE = 20UNITS*$50+60UNITS*$55+80UNITS*$60+80UNITS*$62

= $14060