Megan’s garden shop maintains an inventory of mower blades on a periodic basis.
ID: 2446462 • Letter: M
Question
Megan’s garden shop maintains an inventory of mower blades on a periodic basis. Purchases of the blades during the year are as follows:
Jan1- inventory of 30 units @ $215 each
Mar8- purchased 20 units @ $220 each
May15- purchased 15 units @ $225 each
May30- purchased 20 units @ $228 each
The ending inventory, by physical count, is 52 units. Determine the value of the ending inventory and the cost of goods sold by the following methods: weighted average cost; first in, first out; and last in, first out. ( round all computations to two decimal places. )
Explanation / Answer
Ending inventory = Beginning inventory + Purchases - Inventory sold (COGS)
52 = 30 + (20 + 15 + 20) - Inventory sold
Inventory sold (COGS) = 85 - 52 = 33 units
Ending inventory & COGS are computed as follows.
WEIGHTED AVERAGE Date Qty Purchased Purchases Unit Cost($) Purchases Total Cost($) Qty Sold Cost of Merchandize Sold per Unit($) Total Cost of Merchandize Sold($) Inventory Qty Inventory Unit Cost($) Inventory Total Cost($) Jan 1 30.00 215.00 6450.00 Mar 08 20.00 220.00 4400.00 50.00 10850.00 May 15 15.00 225.00 3375.00 65.00 14225.00 May 30 20.00 228.00 4560.00 85.00 221.00 18785.00 33.00 221.00 7293.00 May 31 52.00 221.00 11492.00 FIFO Date Qty Purchased Purchases Unit Cost($) Purchases Total Cost($) Qty Sold Cost of Merchandize Sold per Unit($) Total Cost of Merchandize Sold($) Inventory Qty Inventory Unit Cost($) Inventory Total Cost($) Jan 1 30.00 215.00 6450.00 Mar 08 20.00 220.00 4400.00 30.00 215.00 6450.00 20.00 220.00 4400.00 Total: Mar 08 50.00 10850.00 May 15 15.00 225.00 3375.00 30.00 215.00 6450.00 20.00 220.00 4400.00 15.00 225.00 3375.00 Total:May 15 65.00 14225.00 May 30 20.00 228.00 4560.00 30.00 215.00 6450.00 20.00 220.00 4400.00 15.00 225.00 3375.00 20.00 228.00 4560.00 Total: May 30 85.00 18785.00 COGS 30.00 215.00 6450.00 3.00 220.00 660.00 Total COGS 33.00 7110.00 May 31 17.00 220.00 3740.00 15.00 225.00 3375.00 20.00 228.00 4560.00 Total Ending Inventory: May 31 52.00 11675.00 LIFO Date Qty Purchased Purchases Unit Cost($) Purchases Total Cost($) Qty Sold Cost of Merchandize Sold per Unit($) Total Cost of Merchandize Sold($) Inventory Qty Inventory Unit Cost($) Inventory Total Cost($) Jan 1 30.00 215.00 6450.00 Mar 08 20.00 220.00 4400.00 30.00 215.00 6450.00 20.00 220.00 4400.00 Total: Mar 08 50.00 10850.00 May 15 15.00 225.00 3375.00 30.00 215.00 6450.00 20.00 220.00 4400.00 15.00 225.00 3375.00 Total:May 15 65.00 14225.00 May 30 20.00 228.00 4560.00 30.00 215.00 6450.00 20.00 220.00 4400.00 15.00 225.00 3375.00 20.00 228.00 4560.00 Total: May 30 85.00 18785.00 COGS 20.00 228.00 4560.00 13.00 225.00 2925.00 Total COGS 33.00 7485.00 May 31 2.00 225.00 450.00 20.00 220.00 4400.00 30.00 215.00 6450.00 Total Ending Inventory: May 31 52.00 11300.00