Question

Spotter Corporation reported the following for June in its periodic inventory records. Date Description Units Unit Cost Total Cost June 1 Beginning 20 $ 10.00 $ 200.00 11 Purchase 30 11.00 330.00 24 Purchase 30 13.00 390.00 30 Ending 34 Required: Calculate the cost of ending inventory and the cost of goods sold under the (a) FIFO, (b) LIFO, and (c) weighted average cost methods. (Do not round your intermediate calculations. Round "Weighted Average Cost" to 2 decimal places.)

Answer 1

The ending inventory and COGS can be computed using different inventory valuation methods: FIFO, LIFO, and weighted average. Using FIFO, the ending inventory is $566 and COGS is $354. With LIFO, the ending inventory is $354 and COGS is $610. Finally, applying the weighted average method results in an ending inventory of $391 and COGS of $529.

Step-by-step explanation:

To address the student’s question regarding the calculation of ending inventory and the cost of goods sold (COGS) using FIFO, LIFO, and weighted average cost methods, we'll break down each method and apply it to the provided data:

FIFO (First-In, First-Out): The oldest inventory is assumed to be sold first. The ending inventory consists of the newest items.LIFO (Last-In, First-Out): The most recently purchased inventory is assumed to be sold first. The ending inventory consists of the oldest items.Weighted Average: This method averages out all the costs of available goods during the period and assigns that average to both the COGS and the ending inventory.

FIFO Calculation:

COGS = (20 units x $10) + (14 units x $11) = $200 + $154 = $354

Ending Inventory = (16 units x $11) + (30 units x $13) = $176 + $390 = $566

LIFO Calculation:

COGS = (30 units x $13) + (20 units x $11) = $390 + $220 = $610

Ending Inventory = (20 units x $10) + (14 units x $11) = $200 + $154 = $354

Weighted Average Calculation:

Average Cost per Unit = ($200 + $330 + $390) / (20 units + 30 units + 30 units) = $920 / 80 units = $11.50 (rounded to 2 decimal places)

COGS = (46 units x $11.50) = $529

Ending Inventory = (34 units x $11.50) = $391

Answer 2

(a) FIFO

cost of ending inventory = $442.00

cost of goods sold = $486.00

(b) LIFO

cost of ending inventory = $354.00

cost of goods sold = $566.00

(c) weighted average cost

cost of ending inventory = $391.00

cost of goods sold = $529.00

Step-by-step explanation:

(a) FIFO

cost of ending inventory

cost of ending inventory = Number of Units left × Earliest Price

= 34 × $13.00

= $442.00

cost of goods sold (46 units sold during the year)

cost of goods sold : 20 units × $10 = $200

26 units × $11 = $286

Total = $486

(b) LIFO

cost of ending inventory

cost of ending inventory : 20 units × $10 = $200

14 units × $11 = $154

Total = $354

cost of goods sold (46 units sold during the year)

cost of goods sold : 30 units × $13 = $390

16 units × $11 = $176

Total = $566

(c) weighted average cost

cost of ending inventory

cost of ending inventory = Number of Units left × Average price

New Average Price = ((20 units × $10) + (30 units × $11)) / 50 units

= $10.60

New Average Price = ((50 units × $10.60) + (30 units × $13)) / 80 units

= $11.50

cost of ending inventory = 34 units × $11.50

= $391.00

cost of goods sold (46 units sold during the year)

cost of goods sold = Number of Units Sold × Average price

= 46 units × $11.50

= $529.00

c