Question

Carstow uses the periodic inventory method. (In the periodic method it is assumed that all sales occur the last day of the accounting period - or after all purchases during the period.) Carstow had the following inventory transactions in May, of the current year. On May 1, Carstow had 250 units in inventory that cost $8 each. On May 14, Carstow purchased 800 units at $10 each. On May 20, Carstow purchased 60 units at $13 each. On May 24, Carstow purchased 110 units at $14 each. Carstow sold 840 units on May 28th for $28 each. Do a computation for items 1-6 in the left column. Then, match the computations to the description. There may be extra choices in the right column that will not be used. Round the weighted average cost per unit to the nearest penny for those computations. (Final answer should be rounded to the nearest dollar.)
1. Sales revenue
2. Total cost of goods available for sale during the period
3. Cost of goods sold under FIFO
4. Cost of goods sold under LIFO
5. Cost of ending inventory under LIFO
6. Cost of goods sold under weighted average
A. $3,300
B. $3,838
C. $4,420
D. $7,900
E. $8,484
F. $9,020
G. $12,320
H. $23,520

Answer 1

Answer:

Carstow Inc.

1. Sales revenue  = H. $23,520

2. Total cost of goods available for sale during the period = G. $12,320

3. Cost of goods sold under FIFO = D. $7,900

4. Cost of goods sold under LIFO = F. $9,020

5. Cost of ending inventory under LIFO = A. $3,300

6. Cost of goods sold under weighted average = E. $8,484

Explanation:

a) Data and Calculations:

Date     Description               Units   Unit Cost    Total

May 1    Beginning inventory  250      $8             $2,000

May 14  Purchase                    800    $10                8,000

May 20 Purchase                      60    $13                   780

May 24 Purchase                      110   $14                 1,540

May 28 Total units/costs      1,220                     $12,320

May 28 Sales                           840            $28

May 28 Ending inventory       380

Sales revenue = $23,520 (840 * $28)

FIFO:

Cost of goods sold = $7,900 (250 * $8 + 590 * $10)

Ending inventory = $4,420 ($12,320 - $7,900)

LIFO:

Ending inventory = $3,300 ($250 * $8 + 130 * $10)

Cost of goods sold = $9,020 (12,320 - $3,300)

Weighted average costs:

Cost of goods available for sale = $12,320

Total units available for sale = 1,220

Unit cost of goods = $10.10 ($12,320/1,220)

Cost of goods sold = $8,484 (840 * $10.10)