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26 November, 21:30

The following information pertains to Company A's Year 1 inventory activities:

Date Transaction Number of Units Purchase price per unit Sale price per unit

January 1 Beginning balance 90 $40

April 11 Sale 50 $70

May 15 Purchase 160 $65

July 25 Sale 30 $75

For each of the following independent assumptions regarding Company A's inventory cost flow methods, click on the associated designated cell and enter the applicable dollar value of inventory that would be reported in Company A's December 31, Year 1, balance sheet. Enter all amounts as positive values. Round all amounts to the nearest dollar. If the amount is zero, enter a zero (0).

1. First-in, first-out (FIFO) periodic

2. Moving average

3. Weighted average

4. Last-in, first-out (LIFO) periodic

5. First-in, first-out (FIFO) perpetual

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Answers (1)
  1. 26 November, 21:59
    0
    1 & 5) FIFO Ending Inventory $ 10,800

    2) moving average: $ 10,400

    3) weighted average $ 9,520

    4) LIFO $ 8,800

    Explanation:

    January 1 Beg Inv 90 $40 subtotal: $ 3,600

    May 15 Purchase 160 $65 subtotal: $ 10,400

    units: 250 total: $ 14,000

    April 11 Sale 50 $70

    July 25 Sale 30 $75

    Total sales 80 units

    Ending Inventory: 250 - 80 = 170 units

    FIFO the ending inventory is compose of the last nits

    As it follows a crhonological order is the same under periodic and perpetual:

    We start from the top

    May 15th 160 at 65$ $10,400

    170 - 160 units = 10 units

    January 1 Beg Inv 10 units at $40 = $ 400

    Total ending inventory: $ 10,800

    Moving average:

    the average is calculate based on the aailable good at hand before eahc purchase:

    At April 11th the company's available goods are the beginning invenory thus the COGS is

    50 units x 40 dollars each = 2,000

    Then, at July 25th the inventory available is:

    40 units at $40 dollars = 1,600

    and 160 units at 65 dollars = 10,400

    total 200 units at 12,000

    Average: $12,000 / 200 units = $60 per unit

    COGS: 30 units x $60 = 1,800

    Total cost: 2,000 + 1,600 = 3,600

    Ending inventory: 14,000 - 3,600 = 10,400

    Weighted average:

    we divide total goods available over the total units purchased:

    14,000 / 250 = 56 dollar per unit

    ending inventory 170 units x 56 per unit = $ 9,520

    LIFO:

    the last units are sold while the first are ending inventory we start from the top part:

    January 1 Beg Inv 90 $40 subtotal: $ 3,600

    170 units - 90 units = 80 units

    May 15 Purchase 80 $65 subtotal: $ 5,200

    Total $ 8,800
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