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) 500 units at $9 on January 8, and (3) 910 units at $10 on January 29. Assume 1,110 units are on hand at the end of the month. Calculate the cost of goods available for sale, 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 sold 600 units between January 9 and January 28. (Round your intermediate calculations to 2 decimal places.)

Find the detailed answer below

Explanation:

January 1 300 units at $5 $1,500

January 8 500 units at $9 $4,500

January 29 910 units at $10 $9,100

1,110 units are available at the end of the month. That means 600 units were sold

A. Under FIFO

1. Cost of goods available for sale:

$1,500 + $4,500 + $9,100 = $15,100

2. Cost of goods sold

300 units at $5 $1,500

300 units at $9 $2,700

Total $4,200

3. Ending inventory

200 units at $9 $1,800

910 units at $10 $9,100

Total $10,900

B. Under LIFO (Last in First Out)

1. Cost of goods available for sale:

$1,500 + $4,500 + $9,100 = $15,100

2. Cost of goods sold

600 units at $10 $6,000

Total $6,000

3. Ending inventory

310 units at $10 $3,100

500 units at $9 $4,500

300 units at $5 $1,500

Total $9,100

C. Weighted average cost flow assumption: Cost of goods available for sale / total units

1. Cost of goods available for sale:

$1,500 + $4,500 + $9,100 = $15,100

2. Cost of goods sold

$15,100 / 1,710 = $8.83

$8.83 x 600 = $5,298

3. Ending inventory

$8.83 x 1,110 = $9,801.3

Under perpetual Inventory System

Between January 9 and January 28. The prevailing price that will be used to sell the inventory will be the price at January 8 ($9)

1. Cost of goods available for sale:

$1,500 + $4,500 + $9,100 = $15,100

2. Cost of goods sold

600 units at $9 $5,400

Total $5,400

3. Ending inventory

1,110 units at $9 $9,990

Total $9,990