Question Completion:
Warnerwoods Company uses a perpetual inventory system. It entered into the following purchases and sales transactions for March.
Date Activities Units Acquired at Cost Total Cost / Sales
Mar. 1 Beginning inventory 70 units at $50.40 $3,528
Mar. 5 Purchase 210 units at $55.40 11,634
Mar. 9 Sales 230 units at $85.40 19,642
Mar.18 Purchases 70 units at $60.40 4,228
Mar. 25 Purchases 120 units at $62.40 7,488
Mar. 29 Sales 100 units at $95.40 9,540
Total units available for sale = 470
Total Sales = 330 units
Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO, (c) weighted average, and (d) specific identification.
For specific identification, the March 9 sale consisted of 50 units from beginning inventory and 180 units from the March 5 purchase; the March 29 sale consisted of 30 units from the March 18 purchase and 70 units from the March 25 purchase.
Answer:
Warnerwoods Company
Cost Assignment Ending Inventory Cost of Goods Sold
(a) specific identification: $8,206 $18,672
(b) weighted average 8,414 18,464.50
(c) FIFO 8,696 18,182
(d) LIFO 8,080 18,798
Explanation:
a) Data and Calculations:
Date Activities Units Acquired at Cost Total Cost / Sales
Mar. 1 Beginning inventory 70 units at$50.40 $3,528
Mar. 5 Purchase 210 units at $55.40 11,634
Mar. 9 Sales 230 units at $85.40 $19,642
Mar.18 Purchases 70 units at $60.40 4,228
Mar. 25 Purchases 120 units at $62.40 7,488
Mar. 29 Sales 100 units at $95.40 $9,540
Total units available for sale = 470 $26,878
Total Sales = 330 (230 + 100) units $29,182
Ending Inventory = 140 (470 - 330) units
1. For specific identification, Cost of goods sold:
March 9 sale 50 units from beginning inventory at $50.40 = $2,520
and 180 units from the March 5 purchase at $55.40 = 9,972
March 29 sale 30 units from the March 18 purchase at $60.40 = 1,812
and 70 units from the March 25 purchase at $62.40 = 4,368
Total for cost of goods sold under specific identification = $18,672
Ending Inventory = Cost of goods available for sale minus Cost of goods sold
= $8,206 ($26,878 - $18,672)
Weighted Average:
Cost of goods Sold
March 9 sales of 230 units at $54.15 ($3,528+11,634)/280 = $12,454.50
March 29 sales of 100 units at $60.10 $2,707.50+4,228+7,488) 6,010.00
Total cost of goods sold = $18,464.50
Ending Inventory = 140 units at $60.10 = $8,414
Workings:
Balance of inventory of 50 units at $54.15 2,707.50
Purchases 70 units at $60.40 4,228
Purchases 120 units at $62.40 7,488
Total 240 units $14,423.50/240 = $60.10
FIFO:
Cost of Goods Sold
March 9 sales of 230 units (70*$50.40 + 160*$55.40) = $12,392
March 29 sales of 100 units (50*$55.40 + 50*$60.40) = 5,790
Total cost of goods sold = $18,182
Ending Inventory:
Cost of goods available for sale minus Cost of goods sold
= $8,696 ($26,878 - 18,182)
LIFO:
Cost of Goods Sold
March 9 sales of 230 units (20*$50.40 + 210*$55.40) = $12,558
March 29 sales of 100 units (100*$62.40) = 6,240
Total cost of goods sold = $18,798
Ending Inventory
Cost of goods available for sale minus Cost of goods sold
= $8,080 ($26,878 - 18,798)
