1. Kirtland Corporation is considering various inventory systems. At the end of
ID: 2563093 • Letter: 1
Question
1. Kirtland Corporation is considering various inventory systems. At the end of the annual accounting period, December 31, 2015, the accounting records for the most popular item in inventory showed the following: 15 points Transaction Units Unit Cost 400 Beginning inventory, January 1, 2015 Transactions during 2015: $3.00 Purchase, January 30 Purchase, May 1 Sale Jan 31 ($5 each) Sale May 2 ($8 each) 300 3.40 a. b. 460 4.00 C. (160) d. (700) 5. Compute the amount of ending inventory and cost of goods sold at December 31,2015 using: a. Average cost (periodic and perpetual) b. FIFO (periodic and perpetual) c. LIFO (periodic and perpetual)Explanation / Answer
a. Average cost (Periodic):
Cost of ending inventory = $1050
Cost of goods sold = $560 + $2450 = $3010
Average cost (Perpetual)
Cost of goods sold = $2992
Cost of ending inventory = $1068
b. FIFO (Periodic)
Cost of goods sold = Cost of Goods available for sale - Cost of ending inventory
= $4060 - $1200 = $2860
FIFO (Perpetual)
Cost of goods sold = $2860
Cost of ending inventory = $1200
c.
LIFO (Perpetual)
Cost of goods sold = $3160
Cost of ending inventory = $900
LIFO (Periodic)
Cost of goods sold = Cost of Goods available for sale - Cost of ending inventory
= $4060 - $900 = $3160
Units Unit cost Total cost Beginning inventory 400 $3.00 $1200 Purchases: Jan 30 300 3.40 1020 May 1 460 4.00 1840 Goods available for sale 1160 3.50 $4060 Sale: Jan 31 160 3.50 560 May 2 700 3.50 2450 Ending inventory 300 3.50 $1050Related Questions
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