Purchases Sales LINK TO TEXT Specific Identification FIFO LIFO Average-Cost LINK
ID: 2436341 • Letter: P
Question
Purchases
Sales
LINK TO TEXT
Specific Identification
FIFO
LIFO
Average-Cost
LINK TO TEXT
LINK TO TEXT
Stellar Corporation began operations on December 1, 2016. The only inventory transaction in 2016 was the purchase of inventory on December 10, 2016, at a cost of $24 per unit. None of this inventory was sold in 2016. Relevant information is as follows.Ending inventory units December 31, 2016 185 December 31, 2017, by purchase date December 2, 2017 185 July 20, 2017 50 235
During the year 2017, the following purchases and sales were made.
Purchases
Sales
March 15 385 units at $29 April 10 285 July 20 385 units at 30 August 20 385 September 4 285 units at 34 November 18 235 December 2 185 units at 36 December 12 285The company uses the periodic inventory method.
Explanation / Answer
Date Transactions Units Unit cost Total 2017 1-Jan Beginning inventory 185 24 4,440 15-Mar Purchase 385 29 11,165 20-Jul Purchase 385 30 11,550 4-Sep Purchase 285 34 9,690 2-Dec Purchase 185 36 6,660 TOTAL 1,425 43,505 1 Average cost per unit = $ 43,505 / 1,425 units = $ 30.53 per unit 2 Computation od ending inventory; a, FIFO Date Cost of goods sold; Units Units cost Total 10-Apr Sales of first 185 units from beginning inventory 185 24 4,440 Next 100 units March 15 purchase 100 29 2,900 20-Aug Sales of first 285 units from March 15 purchase 285 29 8,265 Next 100 units from july 20 purchase 100 30 3,000 18-Nov Salaes of 235 units from July 20 purchase 235 30 7,050 12-Dec Salaes of 50 units from July 20 purchase 50 30 1,500 Next 235 units from September 4 purchase 235 34 7,990 TOTAL 1,190 35,145 235 $ Total purchases 43,505 Less: Cost of goods sold (35,145) Ending inventory ( 235 units) 8,360 b, LIFO Date Cost of goods sold; Units Units cost Total 10-Apr sales of 285 units from march 15 purchase 285 29 8,265 20-Aug sales of 385 units from July 20 purchase 385 30 11,550 18-Nov sales of 235 units from September 4 purchase 235 34 7,990 12-Dec sales of 185 units from December 2 purchase 185 36 6,660 Next 50 units from September 4 purchases 50 34 1,700 Last 50 units from March 15 purchase 50 29 1,450 TOTAL 1,190 37,615 $ Total purchases 43,505 Less: Cost of goods sold (37,615) Ending inventory ( 235 units) 5,890 c, Average cost method Ending inventory ( 235 units) = 235 units x $ 30.53 = $ 7,174.55 d, Specific identification method Ending inventory, Units Rate $ Amount $ December 2 ,2017 185 36 6,660 July 20,2017 50 30 1,500 Total ending inventory 235 8,160
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