Problem 8-7 Various inventory costing methods [LO8-1, 8-4] Carlson Auto Dealers
ID: 2448518 • Letter: P
Question
Problem 8-7 Various inventory costing methods [LO8-1, 8-4]
Carlson Auto Dealers Inc. sells a handmade automobile as its only product. Each automobile is identical; however, they can be distinguished by their unique ID number. At the beginning of 2013, Carlson had three cars in inventory, as follows:
During 2013, each of the three autos sold for $114,000. Additional purchases (listed in chronological order) and sales for the year were as follows:
Calculate 2013 ending inventory and cost of goods sold assuming the company uses the specific identification inventory method.
Calculate ending inventory and cost of goods sold assuming FIFO and a periodic inventory system.
Calculate ending inventory and cost of goods sold assuming LIFO and a periodic inventory system.
Calculate ending inventory and cost of goods sold assuming the average cost method and a periodic inventory system.
Carlson Auto Dealers Inc. sells a handmade automobile as its only product. Each automobile is identical; however, they can be distinguished by their unique ID number. At the beginning of 2013, Carlson had three cars in inventory, as follows:
Explanation / Answer
Ending invnetory = (specific identification)
since total cost of good is $1053,300
hence COGS = $1053,300 - $270,000 = $783,300
(2) FIFO
Ending = 96,000 + 90300 + 93,000 = $279,300
COGS = $774,000
(3)LIFO
Ending = 84,000 + 84,000 + 87,000 = $255,000
COGS = $798,300
(4) Average
= $1053,300/12 = $87,775
Ending = $87775 * 3 = $263,325
COGS = $87,775 * 9 = $789,975
213 $85,500 216 $88,500 219 $96,000 total = $270,000