Accounting: Calculate the cost of goods available for sale, cost of goods sold, and ending inventory

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 $6 on January 1, (2) 450 units at $9 on January 8, and (3) 780 units at $10 on January 29. Assume 930 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.)

 

                                         FIFO LIFO Weighted Average Cost
Goods Available for Sale

Cost of Goods Sold

Ending Inventory

Answer 1

Do you count from the front or the back?

 

Purchase
Units        $ each       Total
300   @    $6.00       $1,800.00
450   @    $9.00       $4,0500.00

780   @   $10.00       $7,800.00    

Total units purchases     1530  units at total cost    $13,650.00

 Ending Inventory     930 units
Must have sold         600  units  

 

                                     FIFO                    LIFO            Wt Avg
Goods available          $13,650.00          $13,650.00      $13,650.00

   Cost of Goods Sold

      FIFO

300 units @ $6.00         $1,800.00 

300 Units @  $9.00        $2,700.00
600    Total                   $4,500.00

 

   LIFO
600  Units @ 10                                      $6,000.00

 

    Wt Avg

600  Units @  $8.92                                                     $5,352.94


Ending Inventory
FIFO

780 units @ $10             $7,800.00
150 Units @ $9              $1,350.00
Total 930 Units               $9,150.00

LIFO

300units @ 6                                    $1,800.00
450units @ 9                                    $4,050.00
180 Units @10                                  $1,800.00
Total 930 Units                                 $7,650.00


Wt Avg

930 unita @ $8.92                                                    $8,297.06

 

 

 

                                   FIFO                LIFO              Wt avg

Check

COGS                         $4,500              $6,000           $3,552.94

End Inv                       $9,150             $7,650            $8,297.06

 

To Account For            $13,650           $13,650           $13,650

 

 

Do you want the inventory or the COGS to be more representative of the economic situation?

Answer 2

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