Kirtland Corporation uses a periodic inventory system. At the end of the annual
ID: 2484634 • Letter: K
Question
Kirtland Corporation uses a periodic inventory system. At the end of the annual accounting period, December 31, 2015, the accounting records for the most popular item in inventory showed the following: Required: a. Compute the dollar amount of goods available for sale. b. & c. Compute the dollar amount of ending inventory and cost of goods sold at December 31, 2015 under Average cost, First-in, first-out, Last-in, first-out, Specific identification of the inventory costing methods. Specific identification: assuming that the first sale was selected two-fifths from the beginning inventory and three-fifths from the purchase of January 30, 2015. Assume that the second sale was selected from the remainder of the beginning inventory, with the balance from the purchase of May 1, 2015.Explanation / Answer
a. Dollar amount of goods avlaible for sale;
Beginning inventory=390×6=2340
Add purchases:
Jan 30= 293 × 3.30 = 957
May 1= 450×7= 3150
Total=1130 units and dollar amount is $6447
b.
Under periodic inventory system we find the cost of ending inventory . And after that we can find the cost of good sold by using the following formula;
Cost of good sold= goods avalaible for sale - cost of ending inventory
Units in ending inventory;
=390+290+450-150-690
=290 units
1. Periodic FIFO
Ending inventory=290×7=2030
Cost of good sold=6447-2030=4417
2.
Periodic LIFO;
Cost of ending inventory=290×6=1740
Cost of good sold= 6447-1740=4707
3. Under average cost
Average cost of 1130 units=6447/1130=5.71per unit
Cost of ending inventory=290×5.71=1656
Cost of good sold =6447-1656=4791
4. Specific identification
Remaining inventory from;
jan 30 purchase=290-(3/5 of 150)=200units
May 1 purchase=450-360=90 units
Cost of ending inventory=(200×3.30)+(90×7)=1290
Cost of good sold =6447-1290=5157
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.