The college campus bookstore uses a periodic inventory system. The bookstore pur
ID: 2499914 • Letter: T
Question
The college campus bookstore uses a periodic inventory system. The bookstore purchases 420 copies of a textbook at $63 each in June, 970 copies in August at $65 each, and 630 copies in December at $68 each. The bookstore sold 1,890 copies of the textbook during the year.
Required: Calculate the company's ending inventory and cost of goods sold using the each of following inventory costing methods. a. FIFO
b. LIFO
c. Weighted Average cost method. (Round your intermediate calculations to 2 decimal places and final answers to the nearest dollar amount.)
.c. Weighted Average cost method. (Round your intermediate calculations to 2 decimal places and final answers to the nearest dollar amount.)
Explanation / Answer
a)
FIFO
Cost of Good Available for sale = 132350
Unit Available for sale = 2020
Unit Sold = 1890
Ending Inventory (in units) = Unit Available for sale - Unit Sold
Ending Inventory (in units) = 2020-1890
Ending Inventory (in units) = 130 Units
Company's ending inventory = 130 Units @ 68
Company's ending inventory = 130*68
Company's ending inventory = 8840
Cost of Good Sold = Cost of Good Available for sale - Company's ending inventory
Cost of Good Sold = 132350 - 8840
Cost of Good Sold = 123510
b)
LIFO
Cost of Good Available for sale = 132350
Unit Available for sale = 2020
Unit Sold = 1890
Ending Inventory (in units) = Unit Available for sale - Unit Sold
Ending Inventory (in units) = 2020-1890
Ending Inventory (in units) = 130 Units
Company's ending inventory = 130 Units @ 63
Company's ending inventory = 130*63
Company's ending inventory = 8190
Cost of Good Sold = Cost of Good Available for sale - Company's ending inventory
Cost of Good Sold = 132350 - 8190
Cost of Good Sold = 124160
c)
Weighted Average cost method
Cost of Good Available for sale = 132350
Unit Available for sale = 2020
Average Rate = Cost of Good Available for sale/Unit Available for sale
Average Rate = 132350/2020
Average Rate = 65.52
Unit Sold = 1890
Ending Inventory (in units) = Unit Available for sale - Unit Sold
Ending Inventory (in units) = 2020-1890
Ending Inventory (in units) = 130 Units
Company's ending inventory = 130 Units @ 65.52
Company's ending inventory = 130*65.52
Company's ending inventory = 8518
Cost of Good Sold = Unit sold*Average Rate
Cost of Good Sold = 1890*65.52
Cost of Good Sold = 123833
Quantity Rate Amount June 420 63 26460 August 970 65 63050 December 630 68 42840 Total 2020 132350