REC Tire Company completed the following perpetual inventory transactions during
ID: 2510473 • Letter: R
Question
REC Tire Company completed the following perpetual inventory transactions during the month of May:
May 1 Beginning invetntory 16 tires @ $65 each
May 11 purchased 10 tires @ $75 each
May 23 sold 12 tires at $90 each
May 26 purchased 14 tires at $80 each
May 29 sold 15 tires at $80 each
In the partially completed schedules provided below, show :
1. the cost of goods sold for each of the sales; and
2. the value of the inventory on hand after each sale
using the FIFO method, the LIFO method and the weighted average methods for valuing inventory. For the weighted average method, also show the average cost per unit used to compute the cost of goods sold and the inventory after the sale, rounded to the nearest penny (two decimal points). Thus your answer should show for each inventory costing method, two cost of goods sold figures (one for each sale) and two inventory values (one after for each sale). Use the schedules below for your answers. The cells for the required answers are shaded but you may use the other unshaded cells for interim figures if it will help in calculating your answers. Please show only the total values, not the cost and quantities of the individual cost layers of the inventories or goods sold. The first answer has been computed to illustrate the form of answer required.
A. FIFO Method: Date Purchased/Sold No. of Units Unit Price TotalPrice Cost of
Goods Sold Inventory
Value 1-May Inventory 16 65 1,040 11-May Purchased 10 75 750 23-May Sold 12 90 1,080 780 1,010 26-May Purchased 14 80 1,120 29-May Sold 15 90 1,350 B. LIFO Method: Date Purchased/Sold No. of Units Unit Price Total
Price Cost of
Goods Sold Inventory
Value 1-May Inventory 16 65 1,040 11-May Purchased 10 75 750 23-May Sold 12 90 1,080 26-May Purchased 14 80 1,120 29-May Sold 15 90 1,350 C. Weighted Average Method: Date Purchased/Sold No. of Units Unit Price Total
Price Average Cost
per Unit Cost of
Goods Sold Inventory
Value 1-May Inventory 16 65 1,040 11-May Purchased 10 75 750 23-May Sold 12 90 1,080 26-May Purchased 14 80 1,120 29-May Sold 15 90 1,350
Explanation / Answer
FIFO METHOD INVENTORY SCHEDULE
Date
Qty Purchased
Unit Cost
Total Cost
Qty Sold
Unit cost
Cost of goods sold
Ending Inv.Qty
Unit Cost
Total Inventory
May 1
16
65
1040
May 11
10
75
750
16
65
1040
10
75
750
May 23
12
65
780
4
65
260
10
75
750
May 26
14
80
1120
4
65
260
10
75
750
14
80
1120
May 29
4
65
260
13
80
1040
10
75
750
1
80
80
TOTAL
1870
1040
LIFO METHOD INVENTORY SCHEDULE
Date
Qty Purchased
Unit Cost
Total Cost
Qty Sold
Unit cost
Cost of goods sold
Ending Inv.Qty
Unit Cost
Total Inventory
May 1
16
65
1040
May 11
10
75
750
16
65
1040
10
75
750
May 23
10
75
750
14
65
910
May 26
14
80
1120
14
65
910
14
80
1120
May 29
14
80
1120
13
65
845
1
65
65
TOTAL
1935
845
WEIGHTED AVERAGE COST METHOD INVENTORY SCHEDULE
Date
Qty Purchased
Unit Cost
Total Cost
Qty Sold
Unit cost
Cost of goods sold
Ending Inv.Qty
Unit Cost
Total Inventory
May 1
16
65
1040
May 11
10
75
750
16
65
1040
10
75
750
May 23
12
68.85
826.2
14
68.85
963.9
May 26
14
80
1120
14
68.85
963.9
14
80
1120
May 29
15
74.43
1116
13
74.43
967.52
TOTAL
1942.2
967.52
May 23 Weighted Average Cost = (1040+750)/26 = 68.85
May 29 Weighted Average Cost = (963.9+1120)/28 = 74.43
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ALL THE BEST !!!
Date
Qty Purchased
Unit Cost
Total Cost
Qty Sold
Unit cost
Cost of goods sold
Ending Inv.Qty
Unit Cost
Total Inventory
May 1
16
65
1040
May 11
10
75
750
16
65
1040
10
75
750
May 23
12
65
780
4
65
260
10
75
750
May 26
14
80
1120
4
65
260
10
75
750
14
80
1120
May 29
4
65
260
13
80
1040
10
75
750
1
80
80
TOTAL
1870
1040
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