Question

In its first month of operations, Literacy for the Illiterate opened a new bookstore and bought merchandise in the following order: (1) 300 units at $5 on January 1, (2) 450 units at $8 on January 8, and (3) 850 units at $9 on January 29. Assume 1,000 units are on hand at the end of the month.
Calculate the cost of goods available for sales, cost of goods sold, and ending inventory under the (a) FIFO, (b) LIFO, and (c) weighted average cost flow assumptions. Assume perpetual inventory system and sol 600 units between January 9 and January 28. (Round your immediate calculations to 2 decimal places.)

FIFO LIFO Weighted Average Cost
Goods Available for Sale
Cost of Goods Sold
Ending Inventory

Answer 1

Answer:

FIFO

COGS_                 3900

Ending Inventory: 8,850‬

LIFO

Total COGS 4350

Ending Inventory 8,400‬

W/A

COGS 4.080‬

Ending Inventory 8,670‬

Explanation:

Date event units price subtotal

1 Beginning 300 5        1500

8 Purchase 450         8        3600

29 Purchase 850 9         7650

available 1600                 12750

inventory at hand 1,000

sales 600 units

FIFO we sale the first units:

thus 300 at $5

and  300 at $8

total COGS = 3900

Ending Inventory: 12,750 - 3,900 = 8,850‬

LIFO we sale the latest unit but, as sales occur before Jan 29th we don0t use those.

450 at 8

150  at 5

Total COGS 4350

Ending Inventory 12,750 - 4,350 = 8,400‬

W/A

We do the average excluding Jan 29 as it wasn't purchase when we sale:

sales value / units

(1,500 + 3,600) / (300 + 450) = 6.8

COGS 600 units x $6.8 = 4.080‬

Ending Inventory 12,750 - 4,080 = 8,670‬