Answer:
The amount of cost of goods sold for January:
LIFO FIFO Weighted Average
Cost of goods sold $4,520 $4,420 $4,452
Explanation:
a) Data and Calculations:
Date Description Units Unit Cost/Price Total Cost Total Revenue
Jan. 1 Beginning 180 units at $9 each $1,620
Jan. 5 Purchased 170 units at $10 each 1,700
Jan. 9 Sold (300) units at $35 each $10,500
Jan. 14 Purchased 200 units at $11 each 2,200
Jan. 20 Sold (150) units at $35 each 5,250
Jan. 30 Purchased 230 units at $12 each 2,760
Total 780 / 450 $8,280 $15,750
b) Cost of goods sold:
LIFO:
Jan. 9 Sold (300) 170 units at $10 = $1,700
130 units at $9 = 1,170
Jan. 20 Sold (150) 150 units at $11 = 1,650
Cost of goods sold = $4,520
c) FIFO:
Jan. 9 Sold (300) 180 units at $9 = $1,620
120 units at $10 = 1,200
Jan. 20 Sold (150) 50 units at $10 = 500
100 units at $11 = 1,100
Cost of goods sold = $4,420
d) Weighted-Average:
Jan. 9 Sold (300) 300 units at $9.49 = $2,847
Jan. 20 Sold (150) 150 units at $10.70 = 1,605
Cost of goods sold = $4,452
Weighted Average Cost at each point of sale:
$9.49 = ($1,620 + $1,700)/350 units
$10.70 = (($9.49*50) + $2,200)/250 units
e) LIFO = Last In, First Out is based on the assumption that the items sold are from the last inventory purchased instead of the first.
FIFO = First In, First Out is based on the assumption that the items sold are from the first inventory instead of the last.
Weighted-Average: This method averages the cost of inventory to determine the unit cost.
Under the perpetual inventory system, the inventory costs are recorded immediately after an inventory transaction and not at the end of a period.
