9. Periodic Inventory System and Inventory Costing Methods Portia\'s Parts Shop

Question

9.

Periodic Inventory System and Inventory Costing Methods

Portia's Parts Shop recorded the following purchases and sales during the past year:

Assume for the specific identification method that the company sold all of the June 15 purchase and 100 cases each from the January 1 beginning inventory, the October 15 purchase, and the December 15 purchase.

Determine the costs that should be assigned to ending inventory and cost of goods sold according to the periodic inventory method under each of the assumptions that follow.

Costs are assigned by the specific identification method.

Costs are assigned by the average-cost method. In your calculations round average unit cost to the nearest dollar.

Costs are assigned by the FIFO method.

Costs are assigned by the LIFO method.

Jan. 1 Beginning inventory 125 cases @ $23 $ 2,875 Feb. 25 Purchase 100 cases @ $26 2,600 June 15 Purchase 200 cases @ $28 5,600 Oct. 15 Purchase 150 cases @ $28 4,200 Dec. 15 Purchase 100 cases @ $30 3,000 Goods available for sale 675 $18,275 Total sales 500 cases Dec. 31 Ending inventory 175 cases

Explanation / Answer

1 Average cost Units Amount Cost of goods available for sale 675 18275 Average cost per unit 27.07 (18275/675) Ending inventory 175 Average cost per unit 27.07 Total inventory cost 4738 Cost of goods available for sale 18275 Less Ending inventory 4738 Cost of goods sold 13537 2 Specific identification Ending inventory Units Per unit cost Amount Jan 1inventory 25 23 575 Feb 25 purchase 100 26 2600 October 15 purchase 50 28 1400 Total 175 4575 Cost of goods available for sale 18275 Less Ending inventory 4575 Cost of goods sold 13700 3 FIFO Ending inventory Units Per unit cost Amount October 15 purchase 75 28 2100 December 15 purchase 100 30 3000 Total 175 5100 Cost of goods available for sale 18275 Less Ending inventory 5100 Cost of goods sold 13175 4 LIFO Ending inventory Units Per unit cost Amount Jan 1inventory 125 23 2875 Feb 25 purchase 50 26 1300 Total 175 4175 Cost of goods available for sale 18275 Less Ending inventory 4175 Cost of goods sold 14100 specific Average FIFO LIFO Ending inventory 4575 4738 5100 4175 Cost of goods sold 13700 13537 13175 14100 Cost of goods available for sale 18275 18275 18275 18275

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