Question

Novak corp. sells a snowboard, ezslide, that is popular with snowboard enthusiasts. below is information relating to novak corp.’s purchases of ezslide snowboards during september. during the same month, 97 ezslide snowboards were sold. novak corp. uses a periodic inventory system. date explanation units unit cost total cost sept. 1 inventory 11 $97 $ 1,067 sept. 12 purchases 44 100 4,400 sept. 19 purchases 47 101 4,747 sept. 26 purchases 22 102 2,244 totals 124 $12,458 (a) compute the ending inventory at september 30 using the fifo, lifo and average-cost methods. (round average cost per unit to 3 decimal places,
e.g. 125.153 and final answers to 0 decimal places,
e.g. 125.) fifo lifo average-cost the ending inventory at september 30 $ $ $ (b) compute the cost of goods sold at september 30 using the fifo, lifo and average-cost methods. (round average cost per unit to 3 decimal places,
e.g. 125.153 and final answers to 0 decimal places,
e.g. 125.) fifo lifo ave

Answer 1

Answer:

A)

ending inventory under FIFO method = $2,749

ending inventory under LIFO method = $2,667

ending inventory under the average-cost method = $2,713

B)

COGS under FIFO method = $9,709

COGS under LIFO method = $9,791

COGS under the average-cost method = $9,745

Explanation:

Novak Corp. inventory during September

sept. 1             inventory           11            $97             $1,067

sept. 12           purchases        44         $100             $4,400

sept. 19           purchases        47          $101              $4,747

sept. 26          purchases        22         $102             $2,244

totals                                       124                             $12,458

If Novak sold 97 units during September, ending inventory will be 27 units and their value under FIFO method = (22 x $102) + (5 x $101) = $2,244 + $505 = $2,749. COGS under FIFO method = $12,458 - $2,749 = $9,709

If Novak sold 97 units during September, ending inventory will be 27 units and their value under LIFO method = (11 x $97) + (16 x $100) = $1,067 + $1,600 = $2,667. COGS under LIFO method = $12,458 - $2,667 = $9,791

If Novak sold 97 units during September, ending inventory will be 27 units and their value under the average-cost method = ($12,458 / 124 units) x 27 units = $2,712.63 ≈ $2,713. COGS under the average-cost method = $12,458 - $2,713 = $9,745

Answer 2

Answer:

a. The value of ending Inventory using FIFO is $2749.

b. The value of ending Inventory using LIFO is $2667.

c. The value of ending Inventory using Average Cost method is $2713.

We have:

Date     Explanation       Units      unit cost   Total Cost

Sep-01         inv                 11              97                1067

Sep-12 purchases        44               100              4400

Sep-19 purchases         47               101              4747

Sep-26 purchases         22               102              2244

Total                                 124                                  12458

Novak sold 97 snowboards, so the number of snowboards with it at the end of September is $124 -97 = 27 units$.

If Novak adopts First In First Out (FIFO) method, and 27 units are remaining, all 22 units purchased on Sept-26th and $27 -22 = 5 units$ from the purchases made on Sept-19th will remain in inventory.

So the value of inventory using FIFO will be $(22* 102) + (5*101) = 2749$

If Novak adopts Last In First Out (LIFO) method, all 11 units in inventory on  Sept-01st and $27 -11 = 16 units$ from the purchases made on Sept-12th will remain in inventory.

Hence inventory value using LIFO will be $(11* 97) + (16*100) = 2667$

We calculate the Average cost by dividing the Total Cost by total number of units purchased.

$Average Cost = \frac{12458}{124} = 100.468$

The value of inventory using the average cost method is $100.648 * 27 =2713$.