Year 2016 is the first year of operations for your company. You have been given

Question

Year 2016 is the first year of operations for your company. You have been given the following information for the last month. All numbers (other than the cost or price per unit) are in thousands. December 1, 2016, beginning balance of inventory: 2,000 units @10.00 each. Purchases Sales Dec 2 1,500 $10.05 7 600 $10.50 15 900 $11.00 20 1,200 $11.00 27 ·300 @ $11.10 Dec 5 500 @$21.00 8 1,600 @ $22.00 9 700 @ $22.00 18 1,800@ $21.00 30700 @$23.00 Total 4,500 Total 5,300 The company uses the periodic inventory accounting system. The accounting year ends on December 31, 2016 Answer each of the following questions on the left side picking one of the answers on the right side. [Hint: Finding the cost of goods avallable for sale first will help you with some of the answers

Explanation / Answer

1. inventory using weighted average cost = 13128

weighted average cost = ((2000*10)+(1500*10.05)+(600*10.50)+(900*11)+(1200*11)+(300*11.10))/(2000+1500+600+900+1200) = 10.94

ending inventory = (2000+4500-5300)*10.94

2. inventory using FIFO = 13230

(900*11)+(300*11.10) = 13230

3. cost of goods sold using LIFO = 55805

(800*10)+(1500*10.05)+(600*10.50)+(900*11)+(1200*11)+(300*11.10) = 55805

4. cost of goods sold using FIFO = 54575

(2000*10)+(1500*10.05)+(600*10.50)+(900*11)+(300*11)

5. LIFO reserve = 1230

LIFO reserve = FIFO inventory - LIFO inventory = 13230-12000 = 1230

6. LIFO

7. cost of goods sold using weighted average = 5300*10.94 = 57982

8. inventory using LIFO = 1200*10 = 12000

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