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Inventory Valuation FIFO, LIFO, and Average The company reported the.pdf
- 1. Inventory Valuation: FIFO,LIFO, and Average The company reported the following inventory data for the year: Practice 9-7 Units Cost per Unit 300 $1750 Beginning inventory Purchases: 900 1,200 400 18.00 18.25 March 23. Units remaining at year-end. . . . . . .. Compute (1) cost of goods sold and (2) ending inventory assuming (a) FIFO inventory valuation, (b)LIFOin- ventory valuation, and (c) average cost inventory valuation. The company uses a periodic inventory system Practice 9-8 Inventory Valuation: Complications with a Perpetual System Refer to Practice 9-7. Assume that the sales occurred as follows: Units Sold 100 600 1,300 July 15 November 1 Total Compute (1) cost of goods sold and (2) ending inventory assuming (a) FIFO inventory valuation, (b) LIFO inven- tory valuation, and (c) average cost inventory valuation, The company uses a perpetual inventory system Solution Answer Units sold = 2400 – 400 = 2000 FIFO Cost of Goods available for sale Cost of Goods Sold Endging Inventory Units Cost/unit COG for sale Units sold Cost/unit COGS Units Cost/unit Ending inventory Beginning Inventory 300 17.5 5250 300 17.5 5250 0
- 2. 17.5 0 Purchases: Mar-23 900 18 16200 900 18 16200 0 18 0 Sep-16 1200 18.25 21900 800 18.25 14600 400 18.25 7300 TOTAL 2400 43350 2000 36050 400 7300 LIFO Cost of Goodsavailable for sale Cost of Goods Sold Endging Inventory Units
- 3. Cost/unit COG for sale Unitssold Cost/unit COGS Units Cost/unit Ending inventory Beginning Inventory 300 17.5 5250 0 17.5 0 300 17.5 5250 Purchases: Mar-23 900 18 16200 800 18 14400 100 18 1800 Sep-16 1200 18.25 21900 1200 18.25 21900
- 4. 0 18.25 0 TOTAL 2400 43350 2000 36300 400 7050 ---Average Cost Valuation Costof opening units + Purchases = $43350 Opening units + Purchased units = 2400 Average cost = 43350 / 2400 = $18.0625 per unit Cost of Goods Sold = 2000 units sold x $18.0625 = $36125 Value of ending Inventory = 400 units x $18.0625 = $7225 FIFO Opening + Purchases Cost of Goods Sold Closing Inventory Opening units 300 17.50 5250 300 17.50 5250.00 Jan 16 Sale 100 17.50 1750 200 17.50 3500.00 Mar 23 Purchase
- 5. 900 18.00 16200 200 17.50 3500.00 900 18.00 16200.00 July 15 Sale 200 17.50 3500 500 18.00 9000.00 400 18.00 7200 Sept16 Purchase 1200 18.25 21900 500 18.00 9000.00 1200 18.25 21900.00 Nov 1 Sale 500 18.00 9000 400 18.25 7300.00
- 6. 800 18.25 14600 TOTAL 2400 43350 2000 36050 400 7300.00 Units Value Cost of GoodsSold 2000 36050 Closing Inventory 400 7300 LIFO Opening + Purchases Cost of Goods Sold Closing Inventory Opening units 300 17.50 5250 300 17.50 5250.00 Jan 16 Sale 100 17.50 1750 200 17.50
- 7. 3500.00 Mar 23 Purchase 900 18.00 16200 200 17.50 3500.00 900 18.00 16200.00 July15 Sale 600 18.00 10800 200 17.50 3500.00 0 0.00 0 300 18.00 5400.00 Sept 16 Purchase 1200 18.25 21900 200 17.50 3500.00 300 18.00 5400.00 1200 18.25
- 8. 21900.00 Nov 1 Sale 1200 18.25 21900 200 17.50 3500.00 100 18.00 1800 200 18.00 3600.00 TOTAL 2400 43350.00 2000 36250.00 400 7100 Units Value Costof Goods Sold 2000 36250 Closing Inventory 400 7100 Moving Average cost Opening + Purchases Cost of Goods Sold Closing Inventory Opening 300
- 9. 17.50 5250 300 17.50 5250.00 Jan 16 Sale 100 17.50 1750.00 200 17.50 3500.00 Mar23 Purchase 900 18.00 16200 0.00 1100 17.91 19700.00 Jul 15 Sale 600 17.91 10745.45 500 17.91 8954.55 Sept 16 Purchase 1200 18.25 21900 1700 18.15 30854.55 Nov 1 Sale 1300
- 10. 18.15 23594.65 400 18.15 7259.89 Sep 10 Sales TOTAL 2400 43350.00 2000 36090.11 400 18.15 7259.893 Units Value Costof Goods Sold 2000 36090 Closing Inventory 400 7260 FIFO Cost of Goods available for sale Cost of Goods Sold Endging Inventory Units Cost/unit COG for sale Units sold Cost/unit COGS Units Cost/unit Ending inventory
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