Accounting Solution 7.2 (Accounting for Inventories)
Sales
Sales for the period equal $15,360 (120 x $55 + 60 x $56 + 90 x $60).
Cost of Goods Sold: FIFO
The cost of goods sold and the ending inventory are determined in the following table:
| Date |
Purchase |
Cost of Goods Sold |
Inventory |
||||||||||||
| Units |
x |
Cost |
= |
Total |
Units |
x |
Cost |
= |
Total |
Units |
x |
Cost |
= |
Total |
|
| Jan. 1 |
|
|
|
|
|
50 |
x |
$30 |
= |
$1,500 |
|||||
| Feb. 10 |
160 |
x |
$31 |
= |
$4,960 |
50 |
x |
$30 |
= |
$1,500 |
|||||
|
|
|
|
|
|
|
160 |
x |
$31 |
= |
$4,960 |
|||||
| Mar. 17 |
|
|
|
|
|
50 |
x |
$30 |
= |
$1,500 |
|
|
|
|
|
|
|
|
|
|
|
|
70 |
x |
$31 |
= |
$2,170 |
90 |
x |
$31 |
= |
$2,790 |
| Mar. 22 |
60 |
x |
$31 |
= |
$1,860 |
30 |
x |
$31 |
= |
$930 |
|||||
| Apr. 6 |
80 |
x |
$33 |
= |
$2,640 |
|
|
|
|
|
30 |
x |
$31 |
= |
$930 |
|
|
|
|
|
|
|
|
|
|
|
|
80 |
x |
$33 |
= |
$2,640 |
| May 17 |
30 |
x |
$31 |
= |
$930 |
|
|
|
|
|
|||||
|
|
|
|
|
|
|
60 |
x |
$33 |
= |
$1,980 |
20 |
x |
$33 |
= |
$660 |
|
Total COGS |
= |
$8,440 |
End. Inv. |
= |
$660 |
|||||||||
The gross margin equals $6,920 (15,360 - $8,440).
Cost of Goods Sold: LIFO
The calculations for LIFO are presented below:
| Date |
Purchase |
Cost of Goods Sold |
Inventory |
||||||||||||
| Units |
x |
Cost |
= |
Total |
Units |
x |
Cost |
= |
Total |
Units |
x |
Cost |
= |
Total |
|
| Jan. 1 |
|
|
|
|
|
|
50 |
x |
$30 |
= |
$1,500 |
||||
| Feb. 10 |
160 |
x |
$31 |
= |
$4,960 |
|
50 |
x |
$30 |
= |
$1,500 |
||||
|
|
|
|
|
|
|
|
160 |
x |
$31 |
= |
$4,960 |
||||
| Mar. 17 |
|
|
|
|
|
120 |
x |
$31 |
= |
$3,720 |
50 |
x |
$30 |
= |
$1,500 |
|
|
|
|
|
|
|
|
|
40 |
x |
$31 |
= |
$1,240 |
|||
| Mar. 22 |
40 |
x |
$31 | = |
$1,240 |
|
|
||||||||
|
|
20 |
x |
$30 | = |
$600 | 30 |
x |
$30 |
= |
$900 | |||||
| Apr. 6 |
80 |
x |
$33 | = | $2,640 |
|
|
30 |
x |
$30 |
= |
$900 | |||
|
|
|
|
80 |
x |
$33 |
= |
$2,640 | ||||||||
| May 17 |
80 |
x |
$33 | = |
$2,640 |
|
|
|
|||||||
|
|
|
|
|
|
|
10 |
x |
$30 | = |
$300 | 20 |
x |
$30 |
= |
$600 |
|
|
Total COGS |
= |
$8,500 |
End. Inv. |
= |
$600 |
|||||||||
The gross margin is $6,860 (i.e., $15,360 - $8,500).
Location