Check my work 3 Alta Ski Company\'s inventory records contained the following in
ID: 2574204 • Letter: C
Question
Check my work 3 Alta Ski Company's inventory records contained the following information regarding its latest ski model. The company uses a periodic inventory system Beginning inventory, January 1, 2018 Purchases: points 1,400 units e $60 each January 15 January 21 2,900 units $75 each 2,700 units $80 each eBook Sales: January 5 January 22 January 29 1,350 units $100 each 1,750 units8 $110 each 1,200 units $115 each 2,700 units Hint Print Ending inventory, January 31, 2018 References Required 1a. Which method, FIFO or LIFO, will result in the highest cost of goods sold figure for January 2018? 1b. Which method will result in the highest ending inventory balance? 2. Compute cost of goods sold for January and the ending inventory using both the FIFO and LIFO methods. Complete this question by entering your answers in the tabs belowExplanation / Answer
Solution:
It is assumed that you already solved the Part 1-a and 1-b. If not please let me know. I am providing solution for Part 2
Periodic Inventory System
It is a system of inventory in which inventories are updated on a periodic basis. Periodic basis may be monthly, quarterly, weekly, half yearly or yearly. In this system, inventories are not kept up to date.
2-a) Calculation of Ending Inventory and Cost of goods sold for January (First in First Out method (FIFO) – Periodic)
FIFO method says the oldest units in stock are issued or sold first.
FIFO (Periodic)
Cost of Goods Available for sale
Cost of Goods Sold
Value of Ending Inventory
#of units
Cost per Unit
Cost of goods available for sale
#of units
Cost per Unit
Cost of goods sold
Units
$/Unit
$$
Beginning Inventory
1400
$60
$84,000
1400
$60.00
$84,000
0
$60.00
$0
Purchases:
January.15
2900
$75
$217,500
2900
$75
$217,500
0
$75
$0
January.21
2700
$80
$216,000
0
$80
$0
2700
$80
$216,000
Total
7000
$517,500
4300
$301,500
2700
$216,000
Cost of Goods Sold (FIFO-Periodic) = $301,500
Value of Ending Inventory (FIFO Periodic)= $216,000
2) Last in First Out (LIFO) - Periodic
LIFO method says the newest units in stock are issued or sold first.
LIFO
Cost of Goods Available for sale
Cost of Goods Sold
Ending Merchandise Inventory
Units
$/Unit
$$
Units
$/Unit
$$
Units
$/Unit
$$
Beginning Inventory
1400
$60
$84,000
0
$60.00
$0
1400
$60.00
$84,000
Purchases:
January.15
2900
$75
$217,500
1600
$75
$120,000
1300
$75
$97,500
January.21
2700
$80
$216,000
2700
$80
$216,000
0
$80
$0
Total
7000
$517,500
4300
$336,000
2700
$181,500
Cost of Goods Sold (LIFO-Periodic) = $336,000
Value of Ending Inventory (LIFO Periodic)= $181,500
FIFO (Periodic)
Cost of Goods Available for sale
Cost of Goods Sold
Value of Ending Inventory
#of units
Cost per Unit
Cost of goods available for sale
#of units
Cost per Unit
Cost of goods sold
Units
$/Unit
$$
Beginning Inventory
1400
$60
$84,000
1400
$60.00
$84,000
0
$60.00
$0
Purchases:
January.15
2900
$75
$217,500
2900
$75
$217,500
0
$75
$0
January.21
2700
$80
$216,000
0
$80
$0
2700
$80
$216,000
Total
7000
$517,500
4300
$301,500
2700
$216,000