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Scoresby Inc
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.
|
Expert Solution
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
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