In its first month of operations, Literacy for the Illiterate opened a new books

Question

In its first month of operations, Literacy for the Illiterate opened a new bookstore and bought merchandise in the following order:

(1) 280 units at $8 on January 1, (2) 610 units at $9 on January 8, and (3) 910 units at $10 on January 29.

Assume 1,140 units are on hand at the end of 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

Units Unit cost Total 1-Jan 280 8 2240 8-Jan 610 9 5490 29-Jan 910 10 9100 Total 1800 16830 FIFO: Cost of goods available for sale 16830 Ending inventory 11170 =(910*10)+(230*9) Cost of goods sold 5660 =16830-11170 LIFO: Cost of goods available for sale 16830 Ending inventory 10230 =(280*8)+(610*9)+(250*10) Cost of goods sold 6600 =16830-10230 Weighted average: Average cost = 16830/1800= 9.35 Cost of goods available for sale 16830 Ending inventory 10659 =1140*9.35 Cost of goods sold 6171 =16830-10659

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