1-34 Valuing Inventory and Cost of Goods Sold Crowe Metals, Ltd., had the follow

Question

1-34 Valuing Inventory and Cost of Goods Sold Crowe Metals, Ltd., had the following inventory transactions during the month of March (in British pounds, £): 3/1 beginning inventory Week 1, purchases Week 2, purchases Week 3, purchases Week 4, purchases nits @ £2.00 3,000 u 2,000 units @ £2.10 2,000 units @ £2.20 1,000 units@ £2.30 1,000 units @ £2.50 £6,000 4,200 4,400 2,300 2,500 On March 31, a count of the ending inventory was completed, and 4,000 units were on hand. By using the periodic inventory system, calculate the cost of goods sold and ending inventory using LIFO, FIFO, and weighted-average inventory methods

Explanation / Answer

Solution-

Opening Inventory (01/03)= 3000 units *2=€6,000

Purchases during the march month=2000+2000+1000+1000=6000 units

closing inventory (31/03)= 4000 units

units sold during the month = 3000+6000-4000=5000 units

Calculation of cost of goods sold and ending inventory

1. Under LIFO method-( Last in first out)

Cost of goods sold = 1000*2.50+1000*2.30+2000*2.20+1000*2.10=€11,300

Value of ending inventory =1000*2.10+3000*2= €8,100

2. Under FIFO method (First in first out)

Cost of goods sold= 3000*2+2000*2.10=€10,200

Value of ending inventory = 2000*2.20+1000*2.30+1000*2.50=€9,200

3. Under weighted average Inventory method -

Weighted Average cost = (3000*2+2000*2.10+2000*2.20+1000*2.30+1000*2.50)/9000= €2.16

Cost of goods sold = 5000*2.16= €10,800

Ending inventory = 4000*2.16=€ 8,640

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