Question

Kirtland Corporation uses a periodic inventory system. At the end of the annual accounting period, December 31, 2015, the accounting records for the most popular item in inventory showed the following;Transactions Units Unit CostBeginning Inventory Jan 1, 2015 400 $3.00Transactions during 2015:a) Purchase, Jan 30 300 $3.40b) Purchase, May 1 460 $4.00c) Sale ($5 each) (160)d) Sale ($5 each) (700)Compute the amount of goods available for sale.Goods available for sale _____________Compute the amount of ending inventory and cost of goods sold at December 31 under Average cost, First-in, first-out, Last-in, first-out, Specific identification of the inventory costing methods. For Specific identification, assume that the first sale was selected two-fifths from the beginning inventory and three-fifths from the purchase of January 30. Assume that the second sale was selected from the remainder of the beginning inventory, with the balance from the purchase of May 1. (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.)Average Cost First-In, First Out Last-In, First-Out Specific IdentificationEnding Inventory Cost of goods sold

Answer 1

Answer:

Goods available for sale = 300 units

ending inventory under:

• FIFO = $1,200
• LIFO = $900
• weighted average = $1,050
• specific identification = $981.60

COGS under:

• FIFO = $2,860
• LIFO = $3,160
• weighted average = $3,010
• specific identification = $3,078.40

Explanation:

Transactions                                       Units        Unit Cost      Total

Beginning Inventory Jan 1, 2015        400          $3.00         $1,200

a) Purchase, Jan 30                            300          $3.40         $1,020

b) Purchase, May 1                              460          $4.00         $1,840

c) Sale                                                 (160)          $5.00                      ($800)

d) Sale                                                (700)          $5.00                     ($3,500)

total                                                      300                             $4,060

ending inventory under:

FIFO = 300 x $4 = $1,200

LIFO = 300 x $3 = $900

weighted average = ($4,060 / 1,160) x 300 = $1,050

specific identification = $4,060 - $3,078.40 = $981.60

COGS under:

FIFO = 300 x $4 = $4,060 - $1,200 = $2,860

LIFO = 300 x $3 = $4,060 - $900 = $3,160

weighted average = $4,060 - $1,050 = $3,010

specific identification = (160 x 2/5 x $3) + (160 x 3/5 x $3.40) + (240 x $3) + (460 x $4) = $3,078.40