CALCULATOR PRINTER VERSION BACK Exercise 6-3 Teal Mountain Inc. sells a snowboar
ID: 2558642 • Letter: C
Question
CALCULATOR PRINTER VERSION BACK Exercise 6-3 Teal Mountain Inc. sells a snowboard, EZslide, that is popular with snowboard enthusiasts. Below is information relating to Teal Mountain Inc.'s purchases . EZslide snowboards during September. During the same month, 98 EZslide snowboards were sold. Teal Mountain Inc. uses a periodic inventory system. Date Sept. 1 Sept. 12 Sept. 19 Sept. 26 Explanation UnitsUnit Cost Total Cost Inventory Purchases Purchases Purchases Totals 12 45 51 18 126 $101 104 105 106 1,212 4,680 5,355 1,908 $13,155 (a) Compute the ending inventory at September 30 using the FIFO, LIFO and average-cost methods. (Round average cost per unit to 3 decimal places, FIFO LIFO AVERAGE-COST The ending inventory at September 30 s 30 using the FIFO, LIFO and average-cost methods. (Round average cost per unit to 3 decimal places, e.g. 125.153 and final answers to O decimal places, e.g. 125.) FIFO LIFO AVERAGE-COST Cost of goods sold s Open Show Work Click if you would like to Show Work for this question:Explanation / Answer
Periodic Inventory System
Periodic Inventory system is a system of inventory in which inventories are updated on a periodic basis. Periodic basis may be monthly, quarterly, weekly, half yearly or yearly. In this system, inventories are not kept up to date.
FIFO Periodic Method
FIFO method says the oldest units in stock are issued or sold first.
FIFO (Periodic)
Units
$/Unit
$$
Inventory Sept.1
12
$101.00
$1,212
Purchases September.12
45
$104.00
$4,680
Purchases Sept.19
51
$105.00
$5,355
Purchases Sept.26
18
$106.00
$1,908
Goods Available for Sale (A)
126
$13,155
Cost of Goods Sold
Sale from Beginning Inventory Sept .1
12
$101.00
$1,212
Sale from Purchases Sept.12
45
$104.00
$4,680
Sale from Purchases Sept.19
41
$105.00
$4,305
Total Cost of Goods Sold (B)
98
$10,197
Ending Inventory (A - B)
28
$2,958
Cost of Ending Inventory FIFO = $2,958
Cost of Goods Sold FIFO = $10,197
Last in First Out (LIFO) - Periodic
LIFO method says the newest units in stock are issued or sold first.
Hence, the recently purchased units are sold first.
LIFO (Periodic)
Units
$/Unit
$$
Inventory Sept.1
12
$101.00
$1,212
Purchases Sept.12
45
$104.00
$4,680
Purchases Sept.19
51
$105.00
$5,355
Purchases Sept.26
18
$106.00
$1,908
Goods Available for Sale (A)
126
$13,155
Cost of Goods Sold
Sale from Beginning Inventory Sept.1
0
$101.00
$0
Sale from Purchases Sept.12
29
$104.00
$3,016
Sale from Purchases Sept.19
51
$105.00
$5,355
Sale from Purchases Sept.26
18
$106.00
$1,908
Total Cost of Goods Sold (B)
98
$10,279
Ending Inventory (A - B)
28
$2,876
Ending Inventory LIFO = $2,876
Cost of Goods Sold LIFO = $10,279
Average Cost Method
Under average cost method, the average cost per unit is calculated and the calculated average cost is applied to the units sold in order to find out cost of goods sold.
Average Unit Cost = Total Cost of material available for sale / total quantity of material available for sale
Cost of Goods Sold = Sold Units x Average Unit Cost
Cost of Goods Available for Sale (from Part 1) = $13,155
Total Units available for sale = 126 Units
Average Cost per unit = $13,155 / 126 Units = $104.405 per unit
Ending Inventory = 28 Units x Average Cost per Unit 104.405 = $2,923
Cost of Goods Sold = 98 Units x Avg Cost per unit 104,405 = $10,232
Show the answer as follows:
FIFO
LIFO
Average Cost
Ending Inventory
$2,958
$2,876
$2,923
Cost of Goods Sold
$10,197
$10,279
$10,232
FIFO (Periodic)
Units
$/Unit
$$
Inventory Sept.1
12
$101.00
$1,212
Purchases September.12
45
$104.00
$4,680
Purchases Sept.19
51
$105.00
$5,355
Purchases Sept.26
18
$106.00
$1,908
Goods Available for Sale (A)
126
$13,155
Cost of Goods Sold
Sale from Beginning Inventory Sept .1
12
$101.00
$1,212
Sale from Purchases Sept.12
45
$104.00
$4,680
Sale from Purchases Sept.19
41
$105.00
$4,305
Total Cost of Goods Sold (B)
98
$10,197
Ending Inventory (A - B)
28
$2,958
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