Question

The beginning inventory was 300 units at a cost of $10 per unit. Goods available for sale during the year were 1,300 units at a total cost of $14,400. In May, 600 units were purchased at a total cost of $6,600. The only other purchase transaction occurred during October. Ending inventory was 550 units.
Required:
a. Calculate the number of units purchased in October and the cost per unit purchased in October
b-1. Assume the periodic inventory system is used. Calculate cost of goods sold and ending inventory using FIFO method
b-2. Assume the periodic inventory system is used. Calculate cost of goods sold and ending inventory using LIFO method

Answer 1

Answer:

a. The number of units purchased in October = 400

The cost per unit = $12

b-1. Cost of goods sold = $7,950

Ending inventory = $6,450

b-2. Cost of goods sold = $8,650

Ending inventory = $5,750

Explanation:

a) Data and Calculations:

Beginning inventory    300 units  at $10 per unit = $3,000

May purchases            600 units at $11 per unit =     6,600

October purchases     400 units at $12 per unit =    4,800

Goods available        1,300 units                             $14,400

Ending inventory        550 units

Goods sold                 750 units

a. The number of units purchased in October = 400 (1,300 - 300 - 600)

The cost per unit = $12 ($4,800/400)

b-1. Cost of goods sold and ending inventory using FIFO method:

Cost of goods sold:

300 units  at $10 per unit = $3,000

450 units at $11 per unit =     4,950  $7,950

Ending inventory = $6,450 ($14,400 - $7,950)

b-2. Cost of goods sold and ending inventory using LIFO method:

Cost of goods sold:

350 units at $11 per unit =     3,850

400 units at $12 per unit =    4,800

Total Cost of goods sold = $8,650

Ending inventory = $5,750 ($14,400 - $8,650)