Question

Problem 8-4 Headland Company’s record of transactions concerning part X for the month of April was as follows. Purchases Sales April 1 (balance on hand) 350 @ $6.60 April 5 550 4 650 @ 6.73 12 450 11 550 @ 7.00 27 1,300 18 450 @ 7.06 28 150 26 850 @ 7.39 30 450 @ 7.66

Calculate average-cost per unit. Assume that perpetual inventory records are kept in units only. (Round answer to 2 decimal places, e.g. 2.76.) Average-cost per unit $

Compute the inventory at April 30 on each of the following bases. Assume that perpetual inventory records are kept in units only. (1) First-in, first-out (FIFO). (2) Last-in, first-out (LIFO). (3) Average-cost. (Round final answers to 0 decimal places, e.g. $6,548.) (1) FIFO (2) LIFO (3) Average-cost Ending Inventory $ $ $ LINK TO TEXT

If the perpetual inventory record is kept in dollars, and costs are computed at the time of each withdrawal, what amount would be shown as ending inventory under (1) FIFO, (2) LIFO and (3) Average-cost? (Round average cost per unit to 4 decimal places, e.g. 2.7621 and final answers to 0 decimal places, e.g. 6,548.) (1) FIFO (2) LIFO (3) Average-cost Ending Inventory $ $ $

Answer 1

Correct Answer:

Requirement 1:

Moving average cost
	Inventory balance	Total cost	Average cost for each units
01-Apr	350	$    2,310.00	$           6.6000
04-Apr	1000	$    6,684.50	$           6.6845
05-Apr	450	$    3,008.03	$           6.6845
11-Apr	1000	$    6,858.03	$           6.8580
12-Apr	550	$    3,771.91	$           6.8580
18-Apr	1000	$    6,948.91	$           6.9489
26-Apr	1850	$ 13,230.41	$           7.1516
27-Apr	550	$    3,933.37	$           7.1516
28-Apr	400	$    2,860.63	$           7.1516
30-Apr	850	$    6,307.63	$           7.4207

Requirement 2:

	FIFO	LIFO	Weighted Average
Ending Inventory (units)	1400	1400	1400

Requirement 3:

	FIFO	LIFO	Weighted Average
Ending Inventory (in dollars)	$ 10,435	$ 9,485	$ 9,394

Working:

Cost of Goods Available for sale
		Units	Cost per unit	value
Beginning Inventory	01-Apr	350	$                       6.60	$                   2,310.00
Purchases	04-Apr	650	$                       6.73	$                   4,374.50
Purchases	11-Apr	550	$                       7.00	$                   3,850.00
Purchases Return	18-Apr	450	$                       7.06	$                   3,177.00
Purchases	26-Apr	850	$                       7.39	$                   6,281.50
	30-Apr	450	$                       7.66	$                   3,447.00
Total		3300		$                 23,440.00

	FIFO
A	Total Units Available for sale			3300		$    23,440.00
	Units Sold			1900
	Ending Inventory Units			1400
	Valuation
	Cost of Goods Sold		350		$                           6.60	$      2,310.00
			650		$                           6.73	$      4,374.50
			550		$                           7.00	$      3,850.00
			350		$                           7.06	$      2,471.00
B	Cost of Goods Sold		1900	units		$    13,005.50
A-B	Ending Inventory		1400	units		$    10,434.50

	LIFO
A	Total Units Available for sale			3300		$    23,440.00
	Units Sold			1900
	Ending Inventory Units			1400
	Valuation
	Cost of Goods Sold		450.00		$                           7.66	3,447.00
			850.00		$                           7.39	6,281.50
			450.00		$                           7.06	3,177.00
			150.00		$                           7.00	1,050.00
B	Cost of Goods Sold		1900	units		$    13,955.50
A-B	Ending Inventory		1400	units		$      9,484.50

	Weighted Average
A	Total Units Available for sale			3300		$    23,440.00
	Units Sold			1900
	Ending Inventory Units			1400
	Valuation
	Cost of Goods Sold		550		$                           6.68	$      3,676.48
			1300		$                           7.15	$      9,297.05
			150		$                           7.15	$      1,072.74
B	Cost of Goods Sold		2000	units		$    14,046.26
A-B	Ending Inventory		1400	units		$      9,393.74

End of answer.

Please give a thumbs-up, it will be highly appreciated.

Thanks