Question

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Laker Company reported the following January purchases and sales data for its only product.
  

Date		Activities	Units Acquired at Cost								Units sold at Retail
Jan.	1	Beginning inventory	175	units	@	$	10.00	=	$	1,750
Jan.	10	Sales										135	units	@	$	19.00
Jan.	20	Purchase	130	units	@	$	9.00	=		1,170
Jan.	25	Sales										140	units	@	$	19.00
Jan.	30	Purchase	275	units	@	$	8.00	=		2,200
		Totals	580	units					$	5,120		275	units

Required:
The Company uses a periodic inventory system. For specific identification, ending inventory consists of 305 units, where 275 are from the January 30 purchase, 5 are from the January 20 purchase, and 25 are from beginning inventory. Determine the cost assigned to ending inventory and to cost of goods sold using (a) specific identification, (b) weighted average, (c) FIFO, and (d) LIFO.

Answer 1

(a) Specific identification
Ending inventory = (275*8) + (5*9) + (25*10)	2495
Cost of goods sold = Cost of goods available for sale - Ending inventory = 5120 -2495	2625
(b) Weighted average method :
Average cost per unit = Cost of goods available for sale / Units available for sale = 5120 / 580	8.83
Ending inventory = 305*8.83	2693
Cost of goods sold = Cost of goods available for sale - Ending inventory = 5120 - 2693	2427
.(c) FIFO
Ending inventory = (275*8) + (30*9)	2470
Cost of goods sold = Cost of goods available for sale - Ending inventory = 5120 - 2470	2650
(d) LIFO
Ending inventory = (175*10) + (130*9)	2920
Cost of goods sold = Cost of goods available for sale - Ending inventory = 5120 - 2920	2200