Concept explainers
1.
Introduction:
Inventory is a record of finished goods of a company which they can sell to the customer, work in progress which can be transformed into finish goods and raw material which is a means of production. Inventory is also classified as a current asset in the
To calculate: The total cost of goods available for sale and the number of units available for sales.
1.

Answer to Problem 1PSA
The total cost of goods available for sale is $249300 and the total number of goods available for sale is 680 units
Explanation of Solution
Cost of goods available for sales and the number of goods available for sales:
Date | Particular | Unit | Rate ($) | Total Cost ($) |
1st March | Opening inventory | 100 | 50 | 5,000 |
5th March | Purchases | 400 | 55 | 22,000 |
18th March | Purchases | 120 | 60 | 7,200 |
25st March | Purchases | 200 | 62 | 12,400 |
Total | 822 | 46,600 |
So, the total cost of goods available for sale is $846,600 and the total number of goods available for sale is 822 units
2.
Introduction:
Inventory is a record of finished goods of a company which they can sell to the customer, work in progress which can be transformed into finish goods and raw material which is a means of production. Inventory is also classified as a current asset in the balance sheet and it is valued by FIFO LIFO and weighted average method.
To compute: The number of unit in ending inventory for the company A.
2.

Answer to Problem 1PSA
The number of units in ending inventory is 400 units.
Explanation of Solution
The number of units in closing inventory is as follows:
The number of units in ending inventory is 240 units
3.
Introduction:
Inventory is a record of finished goods of a company which they can sell to the customer, work in progress which can be transformed into finish goods and raw material which is a means of production. Inventory is also classified as a current asset in the balance sheet and it is valued by FIFO LIFO and weighted average method.
To compute: The cost assigned to ending inventory for company A using FIFO, LIFO and weighted average and specific identification.
3.

Answer to Problem 1PSA
Explanation of Solution
a. Cost assigned to ending inventory for the company A using FIFO :
Using FIFO method closing inventory of 240 units will consist:
Thus, the cost assigned to ending inventory is $18,400.
b. Calculating the assigned amount of ending inventory according to the LIFO method:
Using the LIFO method closing inventory of 240 units will consist
Thus, cost of assigned to ending inventory is $14,352
Calculating the assigned amount of ending inventory according to weighted-average method:
The weighted average cost is calculated as:
Particular | Cost of goods available for sale | Cost of goods sold | Ending inventory | ||||||
Unit | Per unit ($) | Total ($) | Units | Per unit | Total | Units | Per unit cost | Ending inventory | |
Beginning inventory | 100 | 50 | 5,000 | 100 | 50 | 5,000 | |||
5th march Purchase | 400 | 55 | 22,000 | 500 | 54 | 27,000 | |||
9th march Sale | 420 | 54 | 22,680 | 80 | 54 | 43,20 | |||
18th march Purchase | 120 | 60 | 7,200 | 200 | 58 | 11,520 | |||
25th march Purchase | 200 | 62 | 12,400 | 400 | 59.8 | 23,920 | |||
29th march Sale | 160 | 62 | 9,920 | 240 | 59.8 | 14,352 | |||
$14,352 |
Thus, cost assigned to ending inventory $ 14352
Cost assigned to total inventory using specific identification method:
Using specific identification method closing inventory of 240 units will consist
Thus, cost assigned to ending inventory is $144060.
4.
Introduction:
Inventory is a record of finished goods of a company which they can sell to the customer, work in progress which can be transformed into finish goods and raw material which is a means of production. Inventory is also classified as a current asset in the balance sheet and it is valued by FIFO LIFO and weighted average method.
To compute: The gross profit earn by the company is cost assigned to ending inventory for the company A using FIFO,LIFO and weighted average and specific identification.
4.

Answer to Problem 1PSA
Gross using FIFO methods is $46200 , using LIFO method is $45800, using weighted average method is $44956, and specific identification method is $46000.
Explanation of Solution
Particular | FIFO | LIFO | Specific identification. | weighted average |
Cost of goods available for sale | 46,600 | 46,600 | 46,600 | 46,600 |
Less: closing stock 240 units | 14,800 | 13,680 | 14,060 | 14,352 |
Cost of goods sold | 31,800 | 32,920 | 32,540 | 32,248 |
Gross profit earned by the company:
Particular | FIFO method | LIFO method | Weighted average method | Specific identification method |
Total Sales | $50,900 | $50,900 | $50,900 | $50,900 |
Less: Cost of goods sold | $31,800 | 32,920 | 32,540 | 32,248 |
Total | 19100 | 17980 | 18360 | 18652 |
Thus, gross using FIFO methods is $19,100, using the LIFO method is $17,980, using the weighted average method is $18,360, and the specific identification method is $18,652.
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Chapter 5 Solutions
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