Inventory Valuation and FIFO, LIFO, Weighted-Average

Accounting Questions on: 1) Inventory Valuation 2) FIFO, LIFO, Weighted-Average

Question #1: Inventory Valuation
Johnson's end inventory is 50 dual cassette decks that were purchased for $75 each. Johnson has been selling these units for $150 each. A new electronics store sells the same cassette decks for $130 each. Johnson's supplier is still charging $75 for the cassette deck. To offset the competition, Johnson has been forced to lower his retail price to $130. What is the value of the Inventory of Johnson Electronics with his 50 duals cassettes? (Show calculation)

*** PLEASE NOTE, FOR QUESTION #2 ALL CALCULATIONS MUST BE SHOWN ON THIS PAGE NOT IN AN EXCEL SPREADSHEET AND THE EXPLANATION MUST RESEMBLE THE FORMAT BELOW.

DATE OF PURCHASE NUMBER OF BOATS COST PER BOAT TOTAL COST
September 1,2010 (beginning inventory) 5 $1,500 $ 7,500.00
November 7, 2010 8 1,600 $ 12,800.00
March 12, 2011 12 1,650 $ 19,800.00
May 22, 2011 10 1,680 $ 16,800.00
July 28, 2011 6 1,700 $ 10,200.00
August 30, 2011 4 1,720 $ 6,880.00
Total of boats available for sale 45
Number of boats sold 37
Number of boats in August 31, 2011 inventory 8

A) Weighted-average cost-flow assumption:

Weighted-average cost = Total cost of boats available for sale
Number of boats available for sale

Weighted-average cost = $73,980
45

Weighted-average cost = $1,644 per boat

Cost of ending inventory = $1,644 x 8 = $13,152
Cost of goods sold = $1,644 x 37 = $60,828

B) FIFO cost-flow assumption:
The cost of ending inventory is the cost of the eight boats most recently purchased:
4 boats purchased August 30, 2011 @ 1,720 each = $6,880
4 boats purchased July 28, 2011 @ 1,700 each = $6,800
Cost of 8 boats in ending inventory $13,680

The cost of 37 boats sold is the sum of the costs for the first 37 boats purchased:
Beginning inventory 5 boats @ $1,500 = $7,500
November 7, 2010 purchase 8 boats @ $1,600 = $12,800
March 12, 2011 purchase 12 boats @ $1,650 = $19,800
May 22, 2011 purchase 10 boats @ $1,680 = $16,800
July 28, 2011 purchase 2 boats @ $1,700 = $3,400
Cost of goods sold 60,300

Question #2: Cost Flow Assumptions - FIFO, LIFO, and Weighted Average Using A Periodic System
The following data are available for Sellco for the fiscal year ended on January 31, 2011:

Sales 1,600 units
Beginning Inventory 500 units @ $4
Purchases, in chronological order 600 units @ $5
800 units @ $6
400 units @ $8

A) Calculate cost of goods sold and ending inventory under the following cost-flow assumptions (using a periodic inventory system):
1) FIFO (First In First Out)
2) LIFO (Last In Last Out)
3) Weighted Average. Round the unit cost answer to two decimal places and ending inventory to the nearest $10.
B) Assume that net income using the weighted-average cost-flow assumption is $58,000. Calculate net income under FIFO and LIFO.