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Perpetual Inventory COsting Method

Lakia Corporation reported the following current-year purchases and sales data for its only product:
Date
Date Activities Units Acquired at Cost Units Sold at Retail es Units Acquired at Cost Units Sold at Retail
Jan. 1 Beginning inventory . . . . . . 120 units@ $6.00 = $ 720
Jan. 10 Sales . . . . . . . . . . . . . . . . . . 70 units @ $15
Mar. 7 Purchase . . . . . . . . . . . . . . . 200 units@ $5.50 = 1,100
Mar. 15 Sales . . . . . . . . . . . . . . . . . . 125 units @ $15
July 28 Purchase . . . . . . . . . . . . . . . 500 units@ $5.00 = 2,500
Oct. 3 Purchase . . . . . . . . . . . . . . . 375 units@ $4.40 = 1,650
Oct. 5 Sales . . . . . . . . . . . . . . . . . . 600 units @ $15
Dec. 19 Purchase . . . . . . . . . . . . . . . 100 units@ $4.10 = 410 ______
Totals . . . . . . . . . . . . . . . . . 1,295 units $6,380 795 units

Lakia uses a perpetual inventory system. Ending inventory consists of 500 units, 400 from the July 28 purchase and 100 from the December 19 purchase.

Determine the cost assigned to ending inventory and to cost of goods sold using (a) specific identification, (b) weighted average, (c) FIFO, and (d) LIFO.

Solution Preview

A. Specific Identification: is an actual physical flow inventory costing method in which items still in inventory are specifically costed to arrive at the total cost of the ending inventory. This means that for specific Identification, ending inventory is specifically the 400 from July 28 and the 100 from December 19.

Ending inventory = 400 * 5 (July 28 purchase) + 100 * 4.10 (December 19 Purchase)
Ending Inventory = 2410

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B. Weighted Average: In order to determine the weighted-average, you need to add all the costs of the items purchased during the year ...

Solution Summary

It contains solution for problems related to:

- Specific Identification
- Weighted Average
- FIFO, and
- LIFO

$2.19