Answered Essay: Calculating Cost of Goods Available for Sale, Cost of Goods Sold, and Ending Inventory under FIFO, LI

Calculating Cost of Goods Available for Sale, Cost of Goods Sold, and Ending Inventory under FIFO, LIFO, and Weighted Average Cost (Periodic Inventory)

Aircard Corporation tracks the number of units purchased and sold throughout each accounting period but applies its inventory costing method at the end of each period as if it uses a periodic inventory system. The following are the transactions for the month of July.
Units Unit Cost
  July 1 Beginning Inventory 2,000 $ 40
  July 5 Sold 1,000
  July 13 Purchased 6,000 44
  July 17 Sold 3,000
  July 25 Purchased 8,000 50
  July 27 Sold 5,000

Expert Answer

 

Units in Beginning Inventory = 2,000

Number of units purchased = 6,000 + 8,000
Number of units purchased = 14,000

Number of units sold = 1,000 + 3,000 + 5,000
Number of units sold = 9,000

Number of units Available for Sale = Units in Beginning Inventory + Number of units purchased
Number of units Available for Sale = 2,000 + 14,000
Number of units Available for Sale = 16,000

Units in Ending Inventory = Number of units Available for Sale – Number of units Sold
Units in Ending Inventory = 16,000 – 9,000
Units in Ending Inventory = 7,000

Cost of Goods Available for Sale = 2,000 * $40 + 6,000 * $44 + 8,000 * $50
Cost of Goods Available for Sale = $744,000

LIFO:

Cost of Goods Sold = 8,000 * $50 + 1,000 * $44
Cost of Goods Sold = $444,000

Ending Inventory = 5,000 * $44 + 2,000 * $40
Ending Inventory = $300,000

FIFO:

Cost of Goods Sold = 2,000 * $40 + 6,000 * $44 + 1,000 * $50
Cost of Goods Sold = $394,000

Ending Inventory = 7,000 * $50
Ending Inventory = $350,000

Weighted-average Cost:

Cost of Goods Available for Sale = $744,000
Number of units Available for Sale = 16,000

Weighted Average Cost per unit = $744,000 / 16,000
Weighted Average Cost per unit = $46.50

Cost of Goods Sold = 9,000 * $46.50
Cost of Goods Sold = $418,500

Ending Inventory = 7,000 * $46.50
Ending Inventory = $325,500

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