The table below provides the inventory transactions pertaining to Sunshine Bicyc
ID: 2424227 • Letter: T
Question
The table below provides the inventory transactions pertaining to Sunshine Bicycle Shop's Mountain Bike Inventory during the month of July 2015. Required: Calculate: 1) Cost of Goods Sold for July 2015, and 2) ending inventory at July 31, 2015 under the 1) Weighted Average and 2) LIFO cost flow assumptions assuming Sunshine uses the perpetual method of accounting for inventory.
Units
Cost per unit
Sales price per unit
7/1/2013
Beg. Inventory
5
$ 165.00
7/8/2013
Purchase
3
$ 175.00
7/15/2013
Sale
4
$ 250.00
$ 250.00
7/25/2013
Purchase
5
$ 180.00
7/29/2013
Sale
3
$ 235.00
$ 235.00
Cost of Goods Sold for July 2015 using the LIFO cost flow assumption?
What is the ending inventory as of July 31 using the LIFO cost flow assumption?
Units
Cost per unit
Sales price per unit
7/1/2013
Beg. Inventory
5
$ 165.00
7/8/2013
Purchase
3
$ 175.00
7/15/2013
Sale
4
$ 250.00
$ 250.00
7/25/2013
Purchase
5
$ 180.00
7/29/2013
Sale
3
$ 235.00
$ 235.00
Explanation / Answer
1) Weighted average cost
Cost 0f goods sold = Opening inventory + purchases - closing inventory
per unit cost in $
Cost of units sold = a+ b
= 675+525 = $1200
Closing Stock of inventory = $1050
WN1: In weighted average cost method
Cost of per unit = total cost of goods in hand/total units in hand
=(825+525)/(3+5)
=$168.75
WN2: in the same way,
Cost per unit = (675+900)/(4+5)
= $175
Closing inventory will be valued at this rate.
2) LIFO: in LIFO, while valuing the inventory it is presumed that the units entered at the last have been sold firstly. So the units in the closing inventroy will be from the oldest units and sold units will be from the latest ones:
Cost of goods sold = c+d
690+540 = $1230
Date Particulars unitsper unit cost in $
Amount in $ 1/7/2015 Opening inventory 5 165 825 8/7/2015 Purchases 3 175 525 15/7/2015 Total cost 8 168.75 (WN1) 1350 15/7/2015 Cost of units sold (a) 4 168.75 675 15/7/2015 Balance units 4 168.75 675 25/7/2015 Purchases 5 180 900 29/7/2015 Cost of Units in hand 9 175 (WN2) 1575 29/7/2015 Cost of units sold (b) 3 175 525 29/7/2015 Closing inventory 6 175 1050Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.