inventory methods: Jones Company was formed on December 1, 2016. The following i
ID: 2580746 • Letter: I
Question
inventory methods:
Jones Company was formed on December 1, 2016. The following information is available from Jones's inventory record for Product X.
Units/Unit Cost
January 1, 2017 (beginning inventory) 2,400 $18.00 Purchases:
January 5, 2017 3,900 $20.00
January 25, 2017 3,600 $21.00
February 16, 2017 1,500 $22.00
March 15, 2017 2,700 $23.00
A physical inventory on March 31, 2017, shows 3,000 units on hand. Instructions Prepare schedules to compute the ending inventory at March 31, 2017, under each of the following inventory methods: (a) FIFO. (b) LIFO. (c) Weighted-average. Show supporting computations in good form
Explanation / Answer
1- FIFO method
opening balance
units
purchase price
total value
1-Jan
2400
18
43200
5-Jan
3900
20
78000
25-Jan
3600
21
75600
16-Feb
1500
21
31500
15-Mar
2700
33
89100
total of inventory available during the year
14100
317400
less units in year end inventory
3000
units sold
11100
Cost of good sold under FIFO method
units
purchase price
total value
1-Jan
sold
2400
18
43200
5-Jan
sold
3900
20
78000
25-Jan
sold
3600
21
75600
16-Feb
sold
1200
21
25200
no of units sold
11100
222000
cost of year end inventory
units
purchase price
total value
16-Feb
balance
300
21
6300
15-Mar
balance
2700
23
62100
cost of year end inventory
3000
68400
2- LIFO method
opening balance
units
purchase price
total value
1-Jan
2400
18
43200
5-Jan
3900
20
78000
25-Jan
3600
21
75600
16-Feb
1500
21
31500
15-Mar
2700
33
89100
total of inventory available during the year
14100
317400
less units in year end inventory
3000
units sold
11100
Cost of good sold under LIFO method
units
purchase price
total value
15-Mar
sold
2700
33
89100
16-Feb
sold
1500
21
31500
25-Jan
sold
3600
21
75600
16-Feb
sold
3300
20
66000
no of units sold
11100
262200
cost of year end inventory
units
purchase price
total value
5-Jan
balance
600
20
12000
1-Jan
balance
2400
18
43200
cost of year end inventory
3000
55200
3- weighted average method
cost of year end inventory using weighted average method
opening balance
units
purchase price
total value
1-Jan
2400
18
43200
5-Jan
3900
20
78000
25-Jan
3600
21
75600
16-Feb
1500
21
31500
15-Mar
2700
33
89100
total of inventory available during the year
14100
317400
weighted average unit price
317400/14100
22.5106383
Cost of good sold under weighted average method
units of units sold*weighted average price
11100*22.5106
249867.66
total value
cost of inventory at year end
units in year end inventory*weighted average price
3000*22.5106
67531.8
1- FIFO method
opening balance
units
purchase price
total value
1-Jan
2400
18
43200
5-Jan
3900
20
78000
25-Jan
3600
21
75600
16-Feb
1500
21
31500
15-Mar
2700
33
89100
total of inventory available during the year
14100
317400
less units in year end inventory
3000
units sold
11100
Cost of good sold under FIFO method
units
purchase price
total value
1-Jan
sold
2400
18
43200
5-Jan
sold
3900
20
78000
25-Jan
sold
3600
21
75600
16-Feb
sold
1200
21
25200
no of units sold
11100
222000
cost of year end inventory
units
purchase price
total value
16-Feb
balance
300
21
6300
15-Mar
balance
2700
23
62100
cost of year end inventory
3000
68400
2- LIFO method
opening balance
units
purchase price
total value
1-Jan
2400
18
43200
5-Jan
3900
20
78000
25-Jan
3600
21
75600
16-Feb
1500
21
31500
15-Mar
2700
33
89100
total of inventory available during the year
14100
317400
less units in year end inventory
3000
units sold
11100
Cost of good sold under LIFO method
units
purchase price
total value
15-Mar
sold
2700
33
89100
16-Feb
sold
1500
21
31500
25-Jan
sold
3600
21
75600
16-Feb
sold
3300
20
66000
no of units sold
11100
262200
cost of year end inventory
units
purchase price
total value
5-Jan
balance
600
20
12000
1-Jan
balance
2400
18
43200
cost of year end inventory
3000
55200
3- weighted average method
cost of year end inventory using weighted average method
opening balance
units
purchase price
total value
1-Jan
2400
18
43200
5-Jan
3900
20
78000
25-Jan
3600
21
75600
16-Feb
1500
21
31500
15-Mar
2700
33
89100
total of inventory available during the year
14100
317400
weighted average unit price
317400/14100
22.5106383
Cost of good sold under weighted average method
units of units sold*weighted average price
11100*22.5106
249867.66
total value
cost of inventory at year end
units in year end inventory*weighted average price
3000*22.5106
67531.8
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