Answer:
Flounder Corp.
Weighted Average FIFO LIFO
Ending Inventory $1,414 $1,580 $1,280
Cost of goods sold $2,796 $2,630 $2,930
Explanation:
a) Data and Calculations:
Date Explanation Units Unit Cost Total Cost
June 1 Inventory 100 $5 $ 500
June 12 Purchases 385 6 2,310
June 23 Purchases 200 7 1,400
Total units 685 $ 4,210
June 30 Inventory 230
June 30 Units Sold 455 (685 - 230)
Weighted Average Cost = Total costs/Total units bought
= $4,210/685 = $6.146
Weighted Average:
Ending Inventory = $1,414 ($6.146 * 230)
Cost of goods sold = $2,796 ($6.146 * 455)
FIFO:
Ending Inventory = (30 * $6) + (200 * $7) = $1,580
Cost of goods sold = (100 * $5) + (355 * $6) = $2,630
LIFO:
Ending Inventory = (100 * $5) + (130 * $6) = $1,280
Cost of goods sold = (200 * $7) + (255 * $6) = $2,930
The weighted average method is based on an average cost for estimating the cost of ending inventory and cost of goods sold. The FIFO method assumes that goods bought initially are the first to be sold while the LIFO method assumes that goods bought last are the first to be sold.
