Exercise 6-15 Snow-Tech, Inc. sells an Xpert ski that is popular with ski enthus
ID: 2561179 • Letter: E
Question
Exercise 6-15 Snow-Tech, Inc. sells an Xpert ski that is popular with ski enthusiasts. The following information shows Snow-Tech's purchases and sales of Xpert ski during December: Unit Sales Price Unit Units Cost 33 $299 24 304 Date Explanation Dec. 1 Beginning inventory 6 Purchases 13 Sales 19 Purchases 22 Sale:s 25 Purchases (38) $492 44 309 (48) 503 34 314 49 Determine the cost of goods sold and ending inventory using (1) FIFO and (2) average cost, assuming Snow-Tech uses a perpetual inventory system. (Round FIFO answers to the nearest whole dollar, e.g. 5,275 and Average cost answers to 2 decimal places, e.g. 15.25.) FIFO Average Cost of goods sold s Ending inventory SHOW SOLUTION Determine the cost of goods sold and ending inventory using (1) FIFO and (2) average cost, assuming Snow-Tech uses a periodic inventory system. (Round FIFO answers to the nearest whole dollar, e.g. 5,275 and Average cost answers to 2 decimal places, e.g. 15.25.) FIFO Average Cost of goods sold s Ending inventory sExplanation / Answer
Calculation of inventory under FIFO method:
Date
Purchases
Sales
Balance
Dec. 1
Beginning Balance
33U X $299 = $6897
Dec. 6
24U X $304 =7296
33U X $299 = $6897
24U X $304 =$7296
Dec.13
33U X $299 =$9867
5U X $304 =$1520
19U X $304 =$5776
Dec.19
44U X $309 =$13596
19U X $304 =$5776
44U X $309 =$13596
Dec.22
19U X $304 =$5776
29U X $309 =$8961
15U X $309 =$4635
Dec. 25
34U X $314 =$10676
15U X $309 =$4635
34U X $314 =$10676
Cost of goods sold (COGS) and ending inventory:
With the help of the above inventory card, we can easily compute the cost of goods sold and ending inventory.
* The total of sales column of perpetual inventory card.
** The balance at 31st December – at the end of balance column.
Calculation of inventory under Average cost method:
Date
Purchases
Sales
Balance
Dec. 1
Beginning Balance
33U X $299 = $6897
Dec. 6
24U X $304 =7296
33U X $299 = $6897
24U X $304 =$7296
57U X $249 =$14193
Dec.13
38U X $249 =$9462
19U X $249 =$4731
Dec.19
44U X $309 =$13596
19U X $249 =$4731
44U X $309 =$13596
63U X $290.905 =$18327
Dec.22
48U X $290.91 =$13963.68
15U X $290.91 =$4363.32
Dec. 25
34U X $314 =$10676
15U X $290.905 =$4363.32
34U X $314 =$10676
49U X $306.92 =$15039.32
Note:
Calculation of Average price:
total units = 33+24 = 57
Total amount = 6897+7296 =$14193
Average price = 14193 /57 = $249
total units = 19+44 = 63
Total amount =4731+13596 =$18327
Average price = 18327 /63 = $290.91
total units = 34+15 = 49
Total amount =10676+4363.32 =$15039.32
Average price = 15039.32 /49= $306.92
Cost of goods sold: $9462 + $13963.68 = $23425.68 (Total of sales column)
Cost of ending inventory: $15039.56 (Balance column)
FIFO
Average
cost of goods sold
$
$26,124
$
$23425.68
ending inventory
$
$15,311
$
15039.32
Date
Purchases
Sales
Balance
Dec. 1
Beginning Balance
33U X $299 = $6897
Dec. 6
24U X $304 =7296
33U X $299 = $6897
24U X $304 =$7296
Dec.13
33U X $299 =$9867
5U X $304 =$1520
19U X $304 =$5776
Dec.19
44U X $309 =$13596
19U X $304 =$5776
44U X $309 =$13596
Dec.22
19U X $304 =$5776
29U X $309 =$8961
15U X $309 =$4635
Dec. 25
34U X $314 =$10676
15U X $309 =$4635
34U X $314 =$10676