Johnny Football Shop began operations on January 2, 2014. The following stock re
ID: 2379424 • Letter: J
Question
Johnny Football Shop began operations on January 2, 2014. The following stock record card for footballs was taken from the records at the end of the year.Date
Voucher
Terms
Units
Received
Unit Invoice
Cost
Gross Invoice
Amount
1/15
10624
Net 30
59
$24
$1,416
3/15
11437
1/5, net 30
74
19
1,406
6/20
21332
1/10, net 30
99
18
1,782
9/12
27644
1/10, net 30
93
14
1,302
11/24
31269
1/10, net 30
85
13
1,105
Totals
410
$7,011
A physical inventory on December 31, 2014, reveals that 114 footballs were in stock. The bookkeeper informs you that all the discounts were taken. Assume that Johnny Football Shop uses the invoice price less discount for recording purchases.
Johnny Football Shop began operations on January 2, 2014. The following stock record card for footballs was taken from the records at the end of the year.
Date
Voucher
Terms
Units
Received
Unit Invoice
Cost
Gross Invoice
Amount
1/15
10624
Net 30
59
$24
$1,416
3/15
11437
1/5, net 30
74
19
1,406
6/20
21332
1/10, net 30
99
18
1,782
9/12
27644
1/10, net 30
93
14
1,302
11/24
31269
1/10, net 30
85
13
1,105
Totals
410
$7,011
A physical inventory on December 31, 2014, reveals that 114 footballs were in stock. The bookkeeper informs you that all the discounts were taken. Assume that Johnny Football Shop uses the invoice price less discount for recording purchases. Date Voucher Terms Units
Received
Unit Invoice
Cost
Gross Invoice
Amount
Link to Text Link to Text Link to Text Compute the 2014 cost of goods sold using the LIFO method. (Round per unit and final answer to 2 decimal paces, e.g. 35.57.)
Cost of Goods Sold using the LIFO method
$ Compute the 2014 cost of goods sold using the LIFO method. (Round per unit and final answer to 2 decimal paces, e.g. 35.57.)
Cost of Goods Sold using the LIFO method
$ $ Johnny Football Shop began operations on January 2, 2014. The following stock record card for footballs was taken from the records at the end of the year.
Date
Voucher
Terms
Units
Received
Unit Invoice
Cost
Gross Invoice
Amount
1/15
10624
Net 30
59
$24
$1,416
3/15
11437
1/5, net 30
74
19
1,406
6/20
21332
1/10, net 30
99
18
1,782
9/12
27644
1/10, net 30
93
14
1,302
11/24
31269
1/10, net 30
85
13
1,105
Totals
410
$7,011
A physical inventory on December 31, 2014, reveals that 114 footballs were in stock. The bookkeeper informs you that all the discounts were taken. Assume that Johnny Football Shop uses the invoice price less discount for recording purchases.
Johnny Football Shop began operations on January 2, 2014. The following stock record card for footballs was taken from the records at the end of the year. A physical inventory on December 31, 2014, reveals that 114 footballs were in stock. The bookkeeper informs you that all the discounts were taken. Assume that Johnny Football Shop uses the invoice price less discount for recording purchases. Compute the December 31, 2014, inventory using the FIFO method. (Round per unit and final answer to 2 decimal paces, e.g. 35.57.) Compute the 2014 cost of goods sold using the LIFO method. (Round per unit and final answer to 2 decimal paces, e.g. 35.57.)
Explanation / Answer
The cost of stock will be taken on an after discount basis for calculation basis as after discount rate is the amount actually paid by Johnny Football Shop. The schedule calculating after discount rate is presented as below:
Date
Voucher
Terms
Units
Received
Unit Invoice
Cost
Less: Discount @ 1% of Unit Invoice cost
After Discount Invoice cost per Unit
Net Invoice
Amount
1/15
10624
Net 30
59
$24
$0
$24
$1,416
3/15
11437
1/5, net 30
74
19
0.19
18.81
1,391.94
6/20
21332
1/10, net 30
99
18
0.18
17.82
1,764.18
9/12
27644
1/10, net 30
93
14
0.14
13.86
1,288.98
11/24
31269
1/10, net 30
85
13
0.13
12.87
1,093.95
Totals
410
$6,955.05
The stock remaining in the closing inventory under FIFO method is from voucher numbers 31269 (85 units) and 27644 (29 units). This is because in FIFO method, units received earlier are sold earlier and closing inventory constitute of the latest units.
Therefore, value of closing inventory under FIFO is :
= (85 x 12.87) + (29 x 13.86) = $1495.89
Closing inventory under LIFO method will constitute of inventory received in the beginning of year. Thus, closing inventory under LIFO will include 59 units from voucher no. 10624 and 55 units from voucher no. 11437.
Therefore value of closing inventory under LIFO is:
= (59 x 24) + (55 x 18.81) = $2450.55
COGS under LIFO = Total cost of inventory purchased during the year
Date
Voucher
Terms
Units
Received
Unit Invoice
Cost
Less: Discount @ 1% of Unit Invoice cost
After Discount Invoice cost per Unit
Net Invoice
Amount
1/15
10624
Net 30
59
$24
$0
$24
$1,416
3/15
11437
1/5, net 30
74
19
0.19
18.81
1,391.94
6/20
21332
1/10, net 30
99
18
0.18
17.82
1,764.18
9/12
27644
1/10, net 30
93
14
0.14
13.86
1,288.98
11/24
31269
1/10, net 30
85
13
0.13
12.87
1,093.95
Totals
410
$6,955.05
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