Perpetual method (average cost indicates that is the method you use) lyi Show yo

Question

Perpetual method (average cost indicates that is the method you use) lyi Show your work S6-3 (Learning Objective 2: Apply the average, FIFO, and LIFO methods) Championship Sporting Goods started March with an inventory of 9 sets of golf clubs that cost a total of $1,350. During March, Charmpionship purchased 27 sets of clubs for $4,320. At the end of the month, Championship had 8 sets of golf clubs on hand. The store manager must select an inventory costing method, and he asks you to tell him both cost of goods sold and ending inventory under these three accounting methods a. Average cost (round average unit cost to the nearest cent) b. FIFO C. LIFO

Explanation / Answer

Cost of Goods Available for Sale Date Explanation Units Unit Cost Total Cost 1-Mar Op. Inventory                      9            150.00            1,350 Mar Purchases                   27            160.00            4,320 Total                   36            5,670 Ending Inventory (In Units) = 8 Sets Anwer 1. Average Cost Average Cost Per Unit = $5,670 (Cost of goods available for sale) / 36 Units ( Units Available for Sale) Average Cost Per Unit = $157.50 per set Value of Ending Inventory = 8 Units X 157.50 Value of Ending Inventory = $1,260 Cost of Goods Sold: Cost of Goods available for sale              5,670 Less: Ending Inventory              1,270 Cost of Goods Sold              4,400 Answer b. FIFO Method Value of Ending Inventory Date Units Unit Cost Total Cost Mar                           8           160.00              1,280 Total                           8              1,280 Cost of Goods Sold: Cost of Goods available for sale              5,670 Less: Ending Inventory              1,280 Cost of Goods Sold              4,390 Answerc . LIFO Method Value of Ending Inventory Date Units Unit Cost Total Cost Mar-17                           8           150.00              1,200 Total                           8              1,200 Cost of Goods Sold: Cost of Goods available for sale              5,670 Less: Ending Inventory              1,200 Cost of Goods Sold              4,470

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