Part 3: Seminole Company began year 2013 with 23,000 units of product in its Jan
ID: 2539823 • Letter: P
Question
Part 3: Seminole Company began year 2013 with 23,000 units of product in its January 1 inventory, at a cost of $15 for each unit. It made successive purchases of its product in year 2013, as follows. The company uses a periodic inventory system. On December 31, 2013, a physical count reveals that 40,000 units of its product remain in inventory. Mar. 7 May 25 Aug. 1 Nov. 10 30,000 units 39,000 units 23,000 units 35,000 units @ $18 each @ $20 each @ $25 each @ $26 each Show all of your work in an Excel spreadsheet for the following tasks: 1. Compute the number and total cost of the units available for sale in year 2013. 2. Compute the amounts assigned to the 2013 ending inventory, and the cost of goods sold for FIFO, LIFO, and weighted average. 3. The 110,000 units sold are $35 each. Prepare comparative income statements for the three inventory costing methods of FIFO, LIFO, and weighted average, which include a detailed cost of goods sold section as part of each statement. (Round your average cost per unit to 2 decimal places.)Explanation / Answer
Answer
Cost of Goods available for sale
Units
Cost/unit
COG for sale
Beginning Inventory
23000
15
345000
Purchases:
Mar-07
30000
18
540000
May-25
39000
20
780000
Aug-01
23000
25
575000
Nov-10
35000
26
910000
TOTAL
150000 units
$3,150,000
FIFO method
FIFO
Cost of Goods available for sale
Cost of Goods Sold
Ending Inventory
Units
Cost/unit
COG for sale
Units sold
Cost/unit
COGS
Units
Cost/unit
Ending inventory
Beginning Inventory
23000
15
345000
23000
15
345000
0
15
0
Purchases:
Mar-07
30000
18
540000
30000
18
540000
0
18
0
May-25
39000
20
780000
39000
20
780000
0
20
0
Aug-01
23000
25
575000
18000
25
450000
5000
25
125000
Nov-10
35000
26
910000
26
0
35000
26
910000
TOTAL
150000
$3150000
110000
$2115000
40000
$1035000
LIFO Method
LIFO
Cost of Goods available for sale
Cost of Goods Sold
Ending Inventory
Units
Cost/unit
COG for sale
Units sold
Cost/unit
COGS
Units
Cost/unit
Ending inventory
Beginning Inventory
23000
15
345000
15
0
23000
15
345000
Purchases:
Mar-07
30000
18
540000
13000
18
234000
17000
18
306000
May-25
39000
20
780000
39000
20
780000
0
20
0
Aug-01
23000
25
575000
23000
25
575000
0
25
0
Nov-10
35000
26
910000
35000
26
910000
0
26
0
TOTAL
150000
$3150000
110000
$2499000
40000
$651000
Weighted Average Method
Average Method
Cost of Goods available for sale
Cost of Goods Sold
Ending Inventory
Units
Cost/unit
COG for sale
Units sold
Weighted Average cost/unit
COGS
Units
Weighted Average cost/unit
Ending inventory
Beginning Inventory
23000
15
345000
Purchases:
Mar-07
30000
18
540000
May-25
39000
20
780000
Aug-01
23000
25
575000
Nov-10
35000
26
910000
TOTAL
150000
[3150000/150000] $21
$3150000
110000
$21
$2310000
40000
$21
$840000
FIFO
LIFO
Weighted Average Method
Sales Revenue
$3850000
$3850000
$3850000
(-) Cost of Goods Sold (as calculated above)
$2115000
$2499000
$2310000
Gross Margin
$1,735,000
$1,351,000
$1,540,000
Cost of Goods available for sale
Units
Cost/unit
COG for sale
Beginning Inventory
23000
15
345000
Purchases:
Mar-07
30000
18
540000
May-25
39000
20
780000
Aug-01
23000
25
575000
Nov-10
35000
26
910000
TOTAL
150000 units
$3,150,000