Scoresby Inc. tracks the number of units purchased and sold throughout each year

Question

Scoresby Inc. tracks the number of units purchased and sold throughout each year but applies its inventory costing method at the end of the year, as if it uses a periodic inventory system. Assume its accounting records provided the following information at the end of the annual accounting period, December 31 Unit Cost $20 Transactions Units a. Inventory, Beginning For the year b. Purchase, March 5 C. Purchase, September 19 d. Sale, April 15 (sold for $65 per unit) e. Sale, October 31 (sold for $68 per unit) f. Operating expenses (excluding income tax expense), $615,000 4,000 10,000 6,000 4,500 9,000 21 23 Required 1. Calculate the number and cost of goods available for sale Number of Goods Available for Sale units Cost of Goods Available for Sale 2. Calculate the number of units in ending inventory Ending Inventory units 3. Compute the cost of ending inventory and cost of goods sold under (a) FIFO, (b) LIFO, and (c) weighted average cost. Cost of Ending Inventory Cost of Goods Sold FIFO LIFO Weighted Average Cost

Explanation / Answer

1) Number of Goods available for sale 20000 Cost of goods Available for sale 428000 date Explanation units per unit Amount 1-Jan inventory,Beginning 4,000 20 80000 5-Mar purchase 10,000 21 210000 19-Sep purchase 6,000 23 138000 total 20,000 428000 weighted average cost =428000/20000= 21.4 2) ending inventory 6500 units ending inventory = nmber of goods available for sale - sale units 20,000 - (4,500+9000) 6500 units 3) Cost of Cost of ending Goods inventory sold FIFO 148500 279500 LIFO 132500 295500 Weighted average cost 139100 288900 4) income statement FIFO LIFO Weighted Average Sales 904500 904500 904500 cost of goods sold 279500 295500 288900 Gross profit 625000 609000 615600 operatinge xpense 615,000 615,000 615,000 net income 10,000 -6,000 600 6) LIFO

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