Problem 62A Express Distribution markets CDs of the performi

Problem 6-2A

Express Distribution markets CDs of the performing artist Fishe. At the beginning of October, Express had in beginning inventory 4,000 of Fishe’s CDs with a unit cost of $7. During October, Express made the following purchases of Fishe’s CDs. Oct. 3 5,000 @ $8 Oct. 19 6,000 @ $10 Oct. 9 7,000 @ $9 Oct. 25 8,000 @ $11 During October, 21,800 units were sold. Express uses a periodic inventory system.

a) Determine the cost of goods available for sale. Cost of goods available for sale

b) Calculate weighted average cost per unit. (Round answer to 2 decimal places, e.g. 2.25.) Weighted average cost per unit

c) Determine (1) the ending inventory and (2) the cost of goods sold under each of the assumed cost flow methods (FIFO, LIFO, and average-cost).

Please show work!

Solution

Computation of Goods Available for Sale Particular Qty Amount Beginning Inventory 4000 $28,000 Purchase (5000X$8+6000X$10+7000X$9+ 8000X$11) 26000 $251,000 Cost of Goods Available for Sale 30000 $279,000 ( Computation of Weighted Average Cost per Unit) Goods Available for Sale Weighted Average Cost Date Quantity Unit Cost Total Cost Unit Unit Cost Total Cost Opg Bal 4000 $7.00 $28,000 4000 $7.00 $28,000 03-Oct 5000 $8 $40,000 9000 $7.56 $68,000 09-Oct 7000 $9 $63,000 16000 $8.19 $131,000 19-Oct 6000 $10 $60,000 22000 $8.68 $191,000 25-Oct 8000 11 $88,000 30000 $9.30 $279,000 Hence Weighted Average Unit Cost for ending inventory and cost of Good Sold will be $9.30 a) Computation of Closing Inventory on FIFO Basis Particular Qty Amount Beginning Inventory 4000 $28,000 Purchase (5000X$8+6000X$10+7000X$9+ 8000X$11) 26000 $251,000 Cost of Goods Available for Sale 30000 $279,000 Less: Cost of Goods Sold (4000X$7+5000X$8+6000X$10+6800X$9) 21800 189200 Ending Inventory(30000-21800) 8200 $89,800 b) Computation of Closing Inventory on LIFO Basis Particular Qty Amount Beginning Inventory 4000 $28,000 Purchase (5000X$8+6000X$10+7000X$9+ 8000X$11) 26000 $251,000 Cost of Goods Available for Sale 30000 $279,000 Less: Cost of Goods Sold (8000X$11+7000X$9+6000X$10 + 800X$8) 21800 217400 Ending Inventory(30000-21800) 8200 $61,600 C) Computation of Closing Inventory on Averag Cost Basis Particular Qty Amount Beginning Inventory 4000 $28,000 Purchase (5000X$8+6000X$10+7000X$9+ 8000X$11) 26000 $251,000 Cost of Goods Available for Sale 30000 $279,000 Less: Cost of Goods Sold ($279000/30000)X21800 21800 202740 Ending Inventory(30000-21800) 8200 $76,260