Question

Blue Spruce Distribution markets CDs of the performing artist Fishe. At the beginning of October, Blue Spruce had in beginning inventory 4,200 of Fishe’s CDs with a unit cost of $7. During October, Blue Spruce made the following purchases of Fishe’s CDs.

Oct. 3		5,250	@	$8		Oct. 19		6,300	@	$10
Oct. 9		7,350	@	$9		Oct. 25		8,400	@	$11

During October, 22,890 units were sold. Blue Spruce uses a periodic inventory system.

Cost of goods available for sale: $292,950

Weighted-average cost per unit: $9.3

Determine (1) the ending inventory and (2) the cost of goods sold under each of the assumed cost flow methods (FIFO, LIFO, and average-cost). Prove the accuracy of the cost of goods sold under the FIFO and LIFO methods.

Answer 1

(A) FIFO METHOD
Ending Inventory
Date	Particulars	Units	Cost per unit	Total Cost
Oct.19	Puchase	210	10	2,100
Oct.25	Puchase	8,400	11	92,400
Ending Inventory	8,610		94,500
Cost of Goods Sold
Particuars			Amount
Cost of goods available for sale		$292,950
Less:Ending Inventory			$94,500
Cost of goods sold			$198450
Proof of cost of goods sold
Date	Units	Cost per unit	Total Cost
Oct.1	4,200	7	29,400
Oct.3	5,250	8	42,000
Oct.9	7,350	9	66,150
Oct.19	6,090	10	60,900
	22,890		$198,450

(B)

LIFO METHOD
Ending Inventory
Date	Particulars	Units	Cost per unit	Total Cost
Oct.1	Beginning inventory	4,200	7	29,400
Oct.3	Puchase	4,410	8	35,280
Ending Inventory	8,610		64,680
Cost of Goods Sold
Particuars			Amount
Cost of goods available for sale			$292,950
Less:Ending Inventory			$64,680
Cost of goods sold			$228,270
Proof of cost of goods sold
Date	Units	Cost per unit	Total Cost
Oct.3	840	8	6,720
Oct.9	7,350	9	66,150
Oct.19	6,300	10	63,000
Oct.25	8,400	11	92,400
	22,890		$228,270

(C)

Weighted-Average Cost Method
Particulars	Computation	Amount($)
Weighted Average Cost of Inventory Per Unit		9.3
Ending Inventory			8,610 untist @ $9.3	80,073
Cost of Goods Sold			(Total cost - cosing stock) (292,950-80,073)	2,12,877