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3 years ago

Transactions Units Amount

Business

1 answer:

mario62 [17]3 years ago

6 0

Answer:

a) Cost of Goods Sold under each method of inventory:

1) Average Cost:

Beginning Inventory 600 units $1,800

Purchases: January 12, 580 units 2,900

Purchases: January 26, 180 units 1,260

Cost of goods available for sale, 1,360 units $5,960

Less ending Inventory, 440 units $1,927.20

Cost of goods sold, 920 units $4,032.80

a2) FIFO:

Beginning Inventory 600 units $1,800

Purchases: January 12, 580 units 2,900

Purchases: January 26, 180 units 1,260

Cost of goods available for sale, 1,360 units $5,960

Less ending Inventory, 440 units $2,560

Cost of goods sold, 920 units $3,400

a3) LIFO

Beginning Inventory 600 units $1,800

Purchases: January 12, 580 units 2,900

Purchases: January 26, 180 units 1,260

Cost of goods available for sale, 1,360 units $5,960

Less ending Inventory, 440 units $1,320

Cost of goods sold, 920 units $4,640

a4) Specific Identification:

Beginning Inventory 600 units $1,800

Purchases: January 12, 580 units 2,900

Purchases: January 26, 180 units 1,260

Cost of goods available for sale, 1,360 units $5,960

Less ending Inventory, 440 units $2,280

Cost of goods sold, 920 units $3,680

B. Partial Income Statement under:

Average cost FIFO LIFO Specific Identification

Beginning Inventory $1,800 $1,800 $1,800 $1,800

Purchases 4,160 4,160 4,160 4,160

Cost of goods for sale $5,960 $5,960 $5,960 $5,960

Less ending Inventory 1,927.20 2,560 1,320 2,280

Cost of goods sold $4,032.80 $3,400 $4,640 $3,680

Explanation:

a) The average cost per unit under Average Method =

Average cost per unit =$4.38 (5,960/1,360)

Ending Inventory, 440 x $4.38 = $1,927.20

b) Ending Inventory under FIFO: 440 units

Cost of 180 units = $1,260

Cost of 260 units = 1,300 (260 x $5)

Total cost = $2,560

c) Ending Inventory under LIFO: 440 units

Cost of 440 units from beginning inventory = 440 x $3 = $1,320

d) Ending Inventory under Specific Identification: 440 units

Remaining opening inventory 140 units at $3 = $420

Remaining Jan 12, 120 units at $5 = $600

Remaining Jan 26, 180 units at $7 = $1,260

Total cost of ending inventory = $2,280

e) These are various inventory costing methods which present different results in their cost of goods sold and the ending inventory.

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