Question

Inventory Costing Methods-Periodic Method Chen Sales Corporation uses the periodic inventory system. On January 1, 2012, Chen had: 1,000 units of product A with a unit cost of $30 per unit. A summary of purchases and sales during 2012 follows:
Unit Units Units
Cost Purchased Sold
Feb.2 400
Apr.6 $32 1,800
July 10 1,600
Aug.9 36 800
Oct.23 800
Dec.30 39 1,200

Required

Assume that Chen uses the first-in, first-out method. Compute the cost of goods sold for 2012 and the ending inventory balance at December 31, 2012, for product A.

Assume that Chen uses the last-in, first-out method. Compute the cost of goods sold for 2012 and the ending inventory balance at December 31, 2012, for product A.

Assume that Chen uses the weighted-average cost method. Compute the cost of goods sold for 2012 and the ending inventory balance at December 31, 2012, for product A.

Answer 1

Answer:

Instructions are listed below.

Explanation:

Giving the following information:

Inventory:

January 1: 1,000 units at $30 per unit.

Feb.2: sold 400 units

Apr.6: purchase 1,800 units at $32

July 10: sold 1,600 units

Aug.9: purchase 800 units at $36

Oct.23: sold 800

Dec.30: purchase 1,200 units at $39

Total units= 4,800 units

Ending inventory= 2,000 units

A) FIFO method

Cost of goods sold= 1,000*30 + 1,800*32= 87,600

Inventory= 800*36 + 1,200*39= 75,600

B) LIFO

COGS= 1,200*39 + 800*36 + 800*32= 101,200

Inventory= 1,000*32 + 1,000*30= 62,000

C) Weighted average

Weighted price= (30 + 32 + 36 + 39)/4= $34.25

COGS= 2,800*34.25= 95,900

Inventory= 2,000*34.25= 68,500