Sandra\'s Purse Boutique uses a periodic inventory system and has the following

Question

Sandra's Purse Boutique uses a periodic inventory system and has the following transactions related to its top-selling Gucci purse for the month of October 2010.

Date Transactions Units Cost per unit Total cost
October 1 Beginning inventory 6 $807 $4,842
October 4 Sale 4
October 10 Purchase 5 804 4,020
October 13 Sale 3
October 20 Purchase 4 813 3,252
October 28 Sale 7
October 30 Purchase 6 824 4,944
$17,058
Calculate ending inventory and cost of goods sold at October 31, 2010, using the specific identification method. The October 4 sale consists of purses from beginning inventory, the October 13 sale consists of one purse from beginning inventory and two purses from the October 10 purchase, and the October 28 sale consists of three purses from the October 10 purchase and four purses from the October 20 purchase. (Omit the "$" sign in your response.)

1.Using LIFO, calculate ending inventory and cost of goods sold at October 31, 2010
2. Using average cost, calculate ending inventory and cost of goods sold at October 31, 2010



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Explanation / Answer

1.Using LIFO, calculate ending inventory and cost of goods sold at October 31, 2010.

LIFO Method
===========
Total Quantity available for sale (6+5+4+6)    21
Less : Sales (4+3+7)                                     14
                                                                 -----
                  Ending Inventory                         7
                                                                 ====
Cost of Ending Inventory
=====================
6 units @ 807            4,842
1 unit  @ 804               804   
    Total                    5,646
                               ======
Cost of Goods Sold
================
Total Cost of ggods available for sales        17,058
Less : Cost of ending inventory                   5,646  
          Cost of goods sold                           11,412
                                                               ========
2. Using average cost, calculate ending inventory and cost of goods sold at October 31, 2010.

Average Cost Method
==================
Average Cost per unit        17,058 / 21               812.285
_________________________________________________
Cost of Ending Inventory     7 units @ 812.285         5,686
Cost of goods sold            14 units @ 812.285        11,372
_________________________________________________

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