Shamrock Company was formed on December 1, 2016. The following information is av

Question

Shamrock Company was formed on December 1, 2016. The following information is available from Shamrock’s inventory records for Product BAP. Units Unit Cost January 1, 2017 (beginning inventory) 726 $ 7.00 Purchases: January 5, 2017 1,452 8.00 January 25, 2017 1,573 9.00 February 16, 2017 968 10.00 March 26, 2017 726 11.00 A physical inventory on March 31, 2017, shows 1,936 units on hand. 1) Prepare schedule to compute the ending inventory at March 31, 2017, under LIFO inventory method. 2) Calculate average-cost per unit. (Round answer to 2 decimal places, e.g. 2.76.)

Explanation / Answer

Cost of Goods Available for Sale Date Explanation Units Unit Cost Total Cost Jan-1 Op. Inventory                 726                 7.00            5,082 Jan-5 Purchases             1,452                 8.00          11,616 Jan-25 Purchases             1,573                 9.00          14,157 Feb-16 Purchases                 968              10.00            9,680 Mar-26 Purchases                 726              11.00            7,986 Total             5,445          48,521 Ending Inventory (In Units) = 1,936 Units Answer 1. LIFO Method Value of Ending Inventory Date Units Unit Cost Total Cost Jan-1                      726                7.00              5,082 Jan-5                   1,210                8.00              9,680 Total                   1,936            14,762 Answer 2. Average Cost Per Unit = $48,521 (Cost of goods available for sale) / 5,445 Units ( Units Available for Sale) Average Cost Per Unit = $8.91 per Unit (Approx.) Value of Ending Inventory = 1,936 Units X $8.91 per unit Value of Ending Inventory = $17,251.91 or say $17,252 (Approx.)

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