Sekhon Company had a beginning inventory on January 1 of 194 units of Product 4-

Question

Sekhon Company had a beginning inventory on January 1 of 194 units of Product 4-18-15 at a cost of $19 per unit. During the year, the following purchases were made.

1,210 units were sold. Sekhon Company uses a periodic inventory system.

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

Mar. 15 484 units at $26 Sept. 4 399 units at $28 July 20 303 units at $27 Dec. 2 121 units at $32

Explanation / Answer

Units avalable for sales =  Beginning inventory + Purchases during the year = 1501units

Ending Inventory units = Units available for sales - Units of goods sold = 1501 units - 1210 units = 291 units

Calculation of Ending Inventory & Cost of Goods(COGS) sold by FIFO

Ending inventory = (170 units * $28) + (121 units * $32) = $8,632

COGS = (194 units * $19) + (484 units * $26) + (303 units * $27 )+ (229 units * $28) = $30,863

Calculation of Ending Inventory & Cost of Goods(COGS) sold by LIFO

Ending inventory = (194 units * $19) + (97 units * $26) = $6,208

COGS = (121 units * $32) + (399 units * $28) + (303 units * $27 ) + (387 units * $26) = $33,287

Calculation of Ending Inventory & Cost of Goods(COGS) sold by Average Cost

Average Cost per unit =  

(194 units * $19) + (484 units * $26) + (303 units * $27 ) + (399 units * $28) +(121 units * $32) / 1501 units = $26.3125

Ending inventory = (291 units * $26.3125) = $7,657

COGS = (1, 210 units * $26.3125) = $31,838

Final Answer

FIFO LIFO AVERAGE - COST The ending inventory $8,632 $6,208 $7,657 The cost of goods sold $30,863 $33,287 $31,838

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