Question

Use Excel and show all computation bases. Preparing a same type of table for each of the FIFO, LIFO, and average costing methods is suggested.

Please compute (1) Cost of goods sold (COGS), and (2) Ending inventory (EI) costs for the following case using (a) FIFO, (b) LIFO, and (c) average costing methods: Case: Date Transaction Units Unit Cost Unit Selling Price 9-1 BI $ 800 1,025 9-3 Purchase 9-17 Sale $1,500 9-22 Purchase 9-26 1,100 1,200 1,450 9-29 1,500 9-30 Sale

Answer 1

Correct Answer:

	FIFO	LIFO	Weighted Average
Cost of Goods Sold	$                     2,850	$                     3,750	$                         3,300
Ending Inventory	$                     3,750	$                     2,850	$                         3,300

Note: since nothing was mentioned about which method to be used, periodic inventory valuation has been used.

Working:

Cost of Goods Available for sale
	Units	Cost per unit	value
Beginning Inventory	1	$                     800.0	$                         800.0
Purchases	2	$                 1,025.0	$                     2,050.0
Purchases	1	$                 1,100.0	$                   1,100.00
Purchases	1	$                 1,200.0	$                     1,200.0
Purchases	1	$                 1,450.0	$                     1,450.0
Total	6		$                         6,600

	FIFO
A	Total Units Available for sale			6		$                  6,600
	Units Sold			3
	Ending Inventory Units			3
	Valuation
	Cost of Goods Sold		1		$                       800.00	$               800.00
			2		$                   1,025.00	$                  2,050
B	Cost of Goods Sold		3	units		$                  2,850
A-B	Ending Inventory		3	units		$              3,750.0

	LIFO
A	Total Units Available for sale			6		$                  6,600
	Units Sold			3
	Ending Inventory Units			3
	Valuation
	Cost of Goods Sold		1		$                   1,450.00	1,450.00
			1		$                   1,200.00	1,200.00
			1		$                   1,100.00	1,100.00
B	Cost of Goods Sold		3	units		$            3,750.00
A-B	Ending Inventory		3	units		$            2,850.00

Weighted Average Cost Per unit
Units		(A)	6
Total Cost		(B)	$               6,600.00
Average Cost		(C=B/A)	$               1,100.00

	Weighted Average
A	Total Units Available for sale			6		$            6,600.00
	Units Sold			3
	Ending Inventory Units			3
	Valuation
	Cost of Goods Sold		3		$              1,100.0000	$            3,300.00
B	Cost of Goods Sold		3	units		$            3,300.00
A-B	Ending Inventory		3	units		$            3,300.00

End of answer.

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