Calculate the total amount to be assigned to the cost of goods sold for 20-2 and ending inventory on December 31 under each of the following periodic inventory methods:
Mastery Problem
Hurst Company’s beginning inventory and purchases during the fiscal year ended December 31, 20-2, are shown.
| Units | Unit Price | Total Cost | ||||
| January 1, 20-2 | Beginning inventory | 1,500 | $10.00 | $15,000 | ||
| January 12 | 1st purchase | 500 | 11.50 | 5,750 | ||
| February 28 | 2nd purchase | 600 | 14.50 | 8,700 | ||
| June 29 | 3rd purchase | 1,200 | 15.00 | 18,000 | ||
| August 31 | 4th purchase | 800 | 16.50 | 13,200 | ||
| October 29 | 5th purchase | 300 | 18.00 | 5,400 | ||
| November 30 | 6th purchase | 700 | 18.50 | 12,950 | ||
| December 21 | 7th purchase | 400 | 20.00 | 8,000 | ||
| 6,000 | $87,000 |
There are 1,200 units of inventory on hand on December 31, 20-2.
Required:
1. Calculate the total amount to be assigned to the cost of goods sold for 20-2 and ending inventory on December 31 under each of the following periodic inventory methods:
| Cost of Goods Sold | Cost of Ending Inventory | |
| a. FIFO | $ | $ |
| b. LIFO | $ | $ |
| c. Weighted-average (round calculations to two decimal places) | $ | $ |
2. Assume that the market price per unit (cost to replace) of Hurst’s inventory on December 31 was $18. Calculate the total amount to be assigned to the ending inventory on December 31 under each of the following methods:
| a. FIFO lower-of-cost-or-market | $ |
| b. Weighted-average lower-of-cost-or-market | $ |
3. In addition to taking a physical inventory on December 31, Hurst decides to estimate the ending inventory and cost of goods sold. During the fiscal year ended December 31, 20-2, net sales of $100,000 were made at a normal gross profit rate of 35%. Use the gross profit method to estimate the cost of goods sold for the fiscal year ended December 31 and the inventory on December 31.
Cost of goods sold $
Estimated inventory $
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