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Scoresby Inc. tracks the number of units purchased and sold throughout each year but applies its inventory costing method at the end of the year, as if it uses a periodic inventory system. Assume its accounting records provided the following information at the end of the annual accounting period, December 31.
Transactions | Units | Unit Cost | ||||
a. Inventory, Beginning | 4,000 | $ | 16 | |||
For the year: | ||||||
b. Purchase, March 5 | 10,000 | 17 | ||||
c. Purchase, September 19 | 6,000 | 19 | ||||
d. Sale, April 15 (sold for $61 per unit) | 4,200 | |||||
e. Sale, October 31 (sold for $64 per unit) | 9,000 | |||||
f. Operating expenses (excluding income tax expense), $602,000 | ||||||
Calculate the number and cost of goods available for sale.
|
Answer:
Req.1
Number of goods available for Sale | 20,000 | units |
---|---|---|
Cost of goods available for sale | $348,000 |
Explanation:
Units (a) | Cost Per Unit (b) | Goods available for sale ( a*b) | |
A | 4000 | $16 | $64,000 |
B | 10,000 | $17 | $170,000 |
C | 6000 | $19 | $114,000 |
20,000 Unit | - | $348,000 |
Req.2
Number of Units in Ending Inventory | $ 6800 Unit |
Explanation:
No. of units available | 20,000 |
less: No. of Unit sold (4200 +9000) | (13,200) |
No. of units in ending inventory | 6800 Unit |
Req .3
Cost of ending inventory | Cost of good sold | |
FIFO | $127,600 | $220,400 |
LIFO | $111,600 | $236,400 |
Weighted Avg .cost | $118,320 | $229,680 |
Explanation:
FIFO
1) Ending Inventory:
Sep.19. 6000 × $19 | $ 114,000 |
Mar.5. 800 × $17 | $13,600 |
6800 Unit | $127,600 |
2) Cost of Good Sold:
Cost of goods available for sale | $348,000 |
Less: Ending Inventory | ($127,600) |
Cost of good sold | $220,400 |
LIFO:
1) Ending Inventory:
Beg. inventory. 4000 $16 | $64,000 |
Mar.5. 2800 × $ 17 | $47,600 |
6800 Unit | $111,600 |
2) Cost of Good Sold:
Cost of goods available for sale | $348,000 |
Less: Ending Inventory | ($111,600) |
Cost of good sold | $236,400 |
Weighted Average Cost:
1) Weighted Avg. Cost Per Unit:
Cost of goods available for sale( a) | $348,000 |
No of units available ( b) | 20,000 |
Weighted Avg cost per unit( a÷b) | $17.4 per unit |
2)
Ending Inventory. ( 6800 × 17.4) | $ 118,320 |
Cost of'good'sold (13,200 × $ 17.4) | $ 229,680 |
Req.4 Income Statement:
SCORESBY INC. | |||
Income Statement | |||
For the year ended December 31 | |||
FIFO | LIFO | Weighted Avg.Cosj | |
Sales Revenue | $832,200 | $832,200 | $832,200 |
Cost of Good Sold | ($220,400) | (236,400) | (229,680) |
Gross Profit | $611,800 | $595,800 | $602,520 |
Operating Expense | ($602,000) | ($602,000) | ($602,000) |
Income /( Loss) | $9800 | - $6200 | $520 |
1) Sales:
( 4200 ×$61) + ( 9000 ×$64)= $832,200