CP7-1 Analyzing the Effects of Four Alternative Inventory Costing Methods [LO 7-

Question

CP7-1 Analyzing the Effects of Four Alternative Inventory Costing Methods [LO 7-3] Scrappers Supplies tracks the number of units purchased and sold throughout each accounting period but applies its inventory costing method at the end of each period, as if it uses a periodic inventory system. Assume its accounting records provided the following information at the end of the annual accounting period, December 31 Transactions Units Unit Cost 190 $33 Beginning inventory, January 1 Transactions during the year: a. Purchase on account, March 2 b. Cash sale, April 1 ($49 each) c. Purchase on account, June 30 d. Cash sale, August 1 ($49 each) 295 (340) 240 (95) 35 39 TIP: Although the purchases and sales are listed in chronological order, Scrappers determines the cost of goods sold after all of the purchases have occurred. Required 1. Compute the cost of goods available for sale, cost of ending inventory, and cost of goods sold at December 31 under each of the following inventory costing methods: (Round "Cost per Unit" to 2 decimal places.) a. Last-in, first-out. Cost per Total Units Unit Beginning Inventory Purchases March 2 June 30 Total Purchases Goods Available for Sale Cost of Goods Sold Units from Beginning Inventory Units from March 2 Purchase Units from June 30 Purchase Total Cost of Goods Sold Ending Inventory

Explanation / Answer

LIFO(Periodic)

a

LIFO(Periodic)

Units Cost per unit Total Beginning Inventory 190 33 6270 Purchases 2-Mar 295 35 10325 30-Jun 240 39 9360 Total Purchases 535 19685 Goods Available for sale 725 25955 Cost of goods sold Units from beginning Inventory 0 0 0 Units from March 2 purchase 195 35 6825 Units from June 30 purchase 240 39 9360 Total cost of goods sold 435 9760 Ending Inventory 290 16195 b Weighted Average(Periodic) Units Cost per unit Total Beginning Inventory 190 33 6270 Purchases 2-Mar 295 35 10325 30-Jun 240 39 9360 Total Purchases 535 19685 Goods Available for sale 725 25955 Cost of goods sold ( (25955/725)*435) 435 15573 Ending Inventory 290 10382 c FIFO(Periodic) Units Cost per unit Total Beginning Inventory 190 33 6270 Purchases 2-Mar 295 35 10325 30-Jun 240 39 9360 Total Purchases 535 19685 Goods Available for sale 725 25955 Cost of goods sold Units from beginning Inventory 190 33 6270 Units from March 2 purchase 245 35 8575 Units from June 30 purchase 0 0 0 Total cost of goods sold 435 14845 Ending Inventory 290 11110

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