Cozler jewelers used the periodic inventory system. Following are the data perta
ID: 2446464 • Letter: C
Question
Cozler jewelers used the periodic inventory system. Following are the data pertaining to the inventory on January 1, the beginning of the fiscal year; purchases during the year; and the inventory count on December 31.
Model --->
JG491
CP925
8M21
Inventory, Jan 1
12 @ $433
4 @ $785
20 @ $319
First Purchase
18 @ $445
8 @ $786
27 @ $321
Second Purchase
24 @ $451
10 @ $787
29 @ $322
Third Purchase
18 @ $451
7 @ $788
31 @ $324
Fourth Purchase
14 @ $457
25 @ $327
Inventory, Dec 31
16
8
30
1.Determine the cost of the inventory on December 31 by the weighed-average-cost method. (round to two decimal places)
2.Determine the cost of the inventory on December 31 by the first in, first out method.
3.Determine the cost of the inventory on December 31 by the last in, first out method.
Model --->
JG491
CP925
8M21
Inventory, Jan 1
12 @ $433
4 @ $785
20 @ $319
First Purchase
18 @ $445
8 @ $786
27 @ $321
Second Purchase
24 @ $451
10 @ $787
29 @ $322
Third Purchase
18 @ $451
7 @ $788
31 @ $324
Fourth Purchase
14 @ $457
25 @ $327
Inventory, Dec 31
16
8
30
Explanation / Answer
Answer
1) Calculation of cost of inventory on December 31 by the weighted-average-cost method
Weighted Average Cost Method -- This method gives due weight-age to quantities purchased and the purchase price to determine the issue price & closing inventory.
Model --->
JG491
CP925
8M21
Quantity
Rate
Cost
Quantity
Rate
Cost
Quantity
Rate
Cost
Inventory, Jan 1
12
$433
$5,196
4
$785
$3,140
20
319
$6,380
First Purchase
18
$445
$8,010
8
$786
$6,288
27
321
$8,667
Second Purchase
24
$451
$10,824
10
$787
$7,870
29
322
$9,338
Third Purchase
18
$451
$8,118
7
$788
$5,516
31
324
$10,044
Fourth Purchase
14
$457
$6,398
25
327
$8,175
Total Purchases + Opening Inventory
86
$38,546
29
$22,814
132
$42,604
Units Issued at Issue Price (Note 1)
70
$448.21
$31,375
21
$786.69
$16,520
102
$322.76
$32,922
Inventory, Dec 31
16
$448.21
$7,171
8
$786.69
$6,294
30
$322.76
$9,683
Note - 1 : Calculation of Weighted Average Issue Price
Weighted Average Price = Total Cost of Materials in Stock / Total Quantity of Materials in Stock
Issue Price per Unit
Model: JG491 = $38,546 / 86 = $448.21
Model: CP925 = $22,814 / 29 = $786.69
Model: 8M21 = $42,604 / 132 = $322.76
Cost of Closing Inventory, Dec 31 under Weighted Average Cost Method
Model: JG491 = $38,546 / 86 x 16 = $7171.36
Model: CP925 = $22,814 / 29 x 8 = $6,293.52
Model: 8M21 = $42,604 / 132 x 30 = $9,682.80
2) Calculation of cost of inventory on December 31 by the First In First Out Method
Under First in - First Out Method (FIFO)
- Material received first are to be issued first
- Closing stock is valued at the price of oldest purchases
So, the value of closing inventory under FIFO method as follows
Model --->
JG491
CP925
8M21
Quantity
Rate
Cost
Quantity
Rate
Cost
Quantity
Rate
Cost
Inventory, Dec 31
Second Purchase
-
-
-
1
$787
$787
From Third Purchase
2
$451
$902
7
$788
$5,516
5
$324
$1,620
From Fourth Purchase
14
$457
$6,398
-
-
-
25
$327
$8,175
Total
16
$7,300
8
$6,303
30
$9,795
3) Calculation of cost of inventory on December 31 by the Last In First Out Method
Under Last in First Out method:
- Material purchased last are to be issued first
- Closing stock is valued at the latest stock price.
So, the value of closing inventory under LIFO method as follows:
Model --->
JG491
CP925
8M21
Quantity
Rate
Cost
Quantity
Rate
Cost
Quantity
Rate
Cost
Inventory, Dec 31
From Inventory, Jan 1
12
$433
$5,196
4
$785
$3,140
20
$319
$6,380
From First Purchase
4
$445
$1,780
4
$786
$3,144
10
$321
$3,210
From Second Purchase
-
-
-
-
-
-
-
-
-
From Third Purchase
-
-
-
-
-
-
-
-
-
From Fourth Purchase
-
-
-
-
-
-
-
-
-
Total
16
$6,976
8
$6,284
30
$9,590
Summary of Value of Closing Inventory, Dec 31 under three different method
Model --->
JG491
CP925
8M21
Quantity
Cost
Quantity
Cost
Quantity
Cost
Inventory, Dec 31
Under Weighted Average Method
16
$7,171
8
$6,294
30
$9,683
Under First in First Out method
16
$7,300
8
$6,303
30
$9,795
Under Last in First Out Method
16
$6,976
8
$6,284
30
$9,590
Model --->
JG491
CP925
8M21
Quantity
Rate
Cost
Quantity
Rate
Cost
Quantity
Rate
Cost
Inventory, Jan 1
12
$433
$5,196
4
$785
$3,140
20
319
$6,380
First Purchase
18
$445
$8,010
8
$786
$6,288
27
321
$8,667
Second Purchase
24
$451
$10,824
10
$787
$7,870
29
322
$9,338
Third Purchase
18
$451
$8,118
7
$788
$5,516
31
324
$10,044
Fourth Purchase
14
$457
$6,398
25
327
$8,175
Total Purchases + Opening Inventory
86
$38,546
29
$22,814
132
$42,604
Units Issued at Issue Price (Note 1)
70
$448.21
$31,375
21
$786.69
$16,520
102
$322.76
$32,922
Inventory, Dec 31
16
$448.21
$7,171
8
$786.69
$6,294
30
$322.76
$9,683