You are the owner of a very small business that sells gourmet coffee. You sell o

Question

You are the owner of a very small business that sells gourmet coffee.

You sell only one product, a 12-ounce bag of whole-bean French roast coffee. You sell each bag of coffee for $14 each, but due to the fluctuation in commodity prices, the price you pay your supplier to stock the product is constantly changing. In your first month of operations, you bought bags of coffee from your supplier in the following order: (a) 1 units at $2 each on January 1, (b) 7 units at $4 each on January 8, and (c) 2 units at $8 each on January 29.

Assuming you sold 6 units during the month, calculate the cost of goods available for sale, ending inventory, and cost of goods sold under the (a) FIFO, (b) LIFO, and (c) weighted average cost flow assumptions. Assume a periodic inventory system is used. (Round "Cost per Unit" to 2 decimal places.)

Explanation / Answer

Solution a:

Solution b:

Solution c:

Computation of COGS and ending inventory - Periodic FIFO Particulars Cost of goods available for sale Cost of goods sold Ending Inventory Nos of units Unit Cost Cost of goods available for sale Nos of units sold Unit Cost Cost of goods sold Nos of units in ending inventory Unit Cost Ending inventory Purchases: 1-Jan 1 $2.00 $2 1 $2.00 $2.00 8-Jan 7 $4.00 $28 5 $4.00 $20.00 2 $4.00 $8.00 29-Jan 2 $8.00 $16 2 $8.00 $16.00 Total 10 $46 6 $22.00 4 $24.00

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