Problem 6-3A Sekhon Company had a beginning inventory on January 1 of 200 units
ID: 2527221 • Letter: P
Question
Problem 6-3A Sekhon Company had a beginning inventory on January 1 of 200 units of Product 4-18-15 at a cost of $20 per unit. During the year, the following purchases were made. Mar. 15 500 units at $21 Sept. 4 413 units at $27 uly 20 313 unis at $22 Dc. 2 125 units at $31 1,250 units were sold. Sekhon Company uses a periodic inventory system. Determine the cost of goods available for sale. The cost of goods available for sale LINK TO TEXT Calculate average cost per unit. (Round answer to 3 decimal places, e.g. 1.250.) Average cost per unit LINK TO TEXT 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). (Round answers to 0 decimal places, e.g. 1,250.) FIFO LIFO AVERAGE-COST The ending inventory The cost of goods sold $ LINK TO TEXT Which cost flow method results in (1) the highest inventory amount for the balance sheet, and (2) the highest cost of goods sold for the income statement? results in the highest inventory amount, produces the highest cost of goods sold,Explanation / Answer
Cost of Goods Available for Sale Date Explanation Units Unit Cost Total Cost 1-Jan Op. Inventory 200 20.00 4,000 15-Mar Purchases 500 21.00 10,500 20-Jul Purchases 313 22.00 6,886 4-Sep Purchases 413 27.00 11,151 2-Dec Purchases 125 31.00 3,875 Total 1,551 36,412 Average Cost Per Unit = $36,412 (Cost of goods available for sale) / 1,551 Units ( Units Available for Sale) Average Cost Per Unit = $23.48 per Unit (Approx.) Ending Inventory (In Units) =1551 Units - 1250 Units = 301 Units FIFO Method Value of Ending Inventory Date Units Unit Cost Total Cost 2-Dec 125 31 3,875 4-Sep 176 27.00 4,752 Total 301 8,627 Cost of Goods Sold: Cost of Goods Available for Sale 36,412 Less: Ending Inventory 8,627 Cost of Goods Sold 27,785 LIFO Method Value of Ending Inventory Date Units Unit Cost Total Cost 1-Jan 200 20 4,000 15-Mar 101 21 2,121 Total 301 6,121 Cost of Goods Sold: Cost of Goods Available for Sale 36,412 Less: Ending Inventory 6,121 Cost of Goods Sold 30,291 Weighted Average Value of Ending Inventory = 301 Units X $23.48 per unit Value of Ending Inventory = $7,066.42 or say $7,066 (Approx.) Cost of Goods Sold: Cost of Goods Available for Sale 36,412 Less: Ending Inventory 7,066 Cost of Goods Sold 29,346 FIFO LIFO Average Cost Ending Inventory 8,627 6,121 7,066 Cost of Goods Sold 27,785 30,291 29,346 FIFO Method results in Highest Inventory amount $8,627 LIFO Method produvces the highest cost of goods sold $30,291