Problem 5-10AB (25 minutes)
WAYWARD COMPANY
Estimated Inventory at March 31
Goods available for sale
Inventory, January 1 …………………………………….…
$ 302,580
Cost of goods purchased ……………………………..…
941,040
Goods available for sale ……………………………….…
1,243,620
Less estimated cost of goods sold
Sales ………………………………………………………………
$1,211,160
Less sales returns ……………………………………….…
(8,410)
Net sales ……………………………………………………....
$1,202,750
Estimated cost of goods sold
[$1,202,750 x (1 – 34%)] ………………………………
(793,815)
Estimated March 31 inventory …………………………..
$ 449,805
Problem 5-1B (40 minutes)
1. Compute cost of goods available for sale and units available for sale
Beginning inventory ……………………...
20 units @ $3,000
$ 60,000
April 6 …………………………………………..
30 units @ $3,500
105,000
April 17 ………………………………………….
5 units @ $4,500
22,500
April 25 ………………………………………….
10 units @ $4,800
48,000
Units available ……………………………….
65 units
Cost of goods available for sale ……..
$235,500
2. Units in ending inventory
Units available (from part 1) …………..…………..
65 units
Less: Units sold (35 + 25) …………………………..
60 units
Ending Inventory (units) ………………..…………
5 units
Problem 5-1B (Continued)
3a. FIFO perpetual
Date
Goods Purchased
Cost of Goods Sold
Inventory Balance
Apr. 1
20 @ $3,000.00 = $ 60,000.00
Apr. 6
30 @ $3,500.00
= $105,000.00
20 @ $3,000.00
30 @ $3,500.00 = $165,000.00
Apr. 9
20 @ $3,000.00
15 @ $3,500.00
= $112,500.00
15 @ $3,500.00 = $ 52,500.00
Apr. 17
5 @ $4,500.00
= $ 22,500.00
15 @ $3,500.00
5 @ $4,500.00 = $ 75,000.00
Apr. 25
10 @ $4,800.00
= $ 48,000.00
15 @ $3,500.00
5 @ $4,500.00
10 @ $4,800.00 = $123,000.00
Apr. 30
15 @ $3,500.00
5 @ $4,500.00
5 @ $4,800.00
= $ 99,000.00
5 @ $4,800.00 = $ 24,000.00
$211,500.00
Problem 5-1B (Continued)
3b. LIFO perpetual
Date
Goods Purchased
Cost of Goods Sold
Inventory Balance
Apr. 1
20 @ $3,000.00 = $ 60,000.00
Apr. 6
30 @ $3,500.00
= $105,000.00
20 @ $3,000.00
30 @ $3,500.00 = $165,000.00
Apr. 9
30 @ $3,500.00
5 @ $3,000.00
= $120,000.00
15 @ $3,000.00 = $ 45,000.00
Apr. 17
5 @ $4,500.00
= $ 22,500.00
15 @ $3,000.00
5 @ $4,500.00 = $ 67,500.00
Apr. 25
10 @ $4,800.00
= $ 48,000.00
15 @ $3,000.00
5 @ $4,500.00
10 @ $4,800.00 = $115,500.00
Apr. 30
10 @ $4,800.00
5 @ $4,500.00
10 @ $3,000.00
= $100,500.00
5 @ $3,000.00 = $ 15,000.00
$220,500.00
Problem 5-1B (Continued)
3c. Weighted Average perpetual
Date
Goods Purchased
Cost of Goods Sold
Inventory Balance
Apr. 1
20 @ $3,000.00 = $ 60,000.00
Apr. 6
30 @ $3,500.00
= $105,000.00
20 @ $3,000.00
30 @ $3,500.00 = $165,000.00
(avg. = $3,300.00)
Apr. 9
35 @ $3,300.00
= $115,500.00
15 @ $3,300.00 = $ 49,500.00
(avg. = $3,300.00)
Apr. 17
5 @ $4,500.00
= $ 22,500.00
15 @ $3,300.00
5 @ $4,500.00 = $ 72,000.00
(avg. = $3,600.00)
Apr. 25
10 @ $4,800.00
= $ 48,000.00
15 @ $3,300.00
5 @ $4,500.00
10 @ $4,800.00 = $120,000.00
(avg. = $4,000.00)
Apr. 30
25 @ $4,000.00
= $100,000.00
5 @ $4,000.00 = $ 20,000.00
(avg. = $4,000.00)
$215,500.00
Problem 5-1B (Concluded)
3d. Specific Identification
Date
Goods Purchased
Cost of Goods Sold
Inventory Balance
Apr. 1
20 @ $3,000.00 = $ 60,000.00
Apr. 6
30 @ $3,500.00
= $105,000.00
20 @ $3,000.00
30 @ $3,500.00 = $165,000.00
Apr. 9
8 @ $3,000.00
27 @ $3,500.00
= $118,500.00
12 @ $3,000.00
3 @ $3,500.00 = $ 46,500.00
Apr. 17
5 @ $4,500.00
= $ 22,500.00
12 @ $3,000.00
3 @ $3,500.00
5 @ $4,500.00 = $ 69,000.00
Apr. 25
10 @ $4,800.00
= $ 48,000.00
12 @ $3,000.00
3 @ $3,500.00
5 @ $4,500.00
10 @ $4,800.00 = $117,000.00
Apr. 30
12 @ $3,000.00
3 @ $3,500.00
10 @ $4,800.00
= $ 94,500.00
5 @ $4,500.00 = $ 22,500.00
$213,000.00
Specific identification—Alternative Computation
Cost of goods sold—20 [8+12] units from beginning inventory, 30 [27+3] units from
April 6 purchase, and 10 units from April 25 purchase
4.
FIFO
LIFO
Weighted
Average
Specific
Identification
Sales* ……………………………..…
$770,000
$770,000
$770,000
$770,000
Less: Cost of goods sold ……
211,500
220,500
215,500
213,000
Gross profit ……………………..…
$558,500
$549,500
$554,500
$557,000
*Sales = (35 units x $12,000) + (25 units x $14,000) = $770,000
Problem 5-2B (40 minutes)
1. Compute cost of goods available for sale and units available for sale
Beginning inventory ……………………...
20 units @ $3,000
$ 60,000
April 6 …………………………………………..
30 units @ $3,500
105,000
April 17 …………………………..……………..
5 units @ $4,500
22,500
April 25 …………………………..……………..
10 units @ $4,800
48,000
Units available …………………………..…..
65 units
Cost of goods available for sale ……..
$235,500
2. Units in ending inventory
Units available (from part 1) …………..…………..
65 units
Less: Units sold (35 + 25) …………………………..
60 units
Ending Inventory (units) ………………..…………
5 units
3.
Periodic Inventory
Ending
Inventory
Cost of
Goods Sold
a. FIFO
(5 x $4,800) ……………………………………………………….
$24,000.00
(20x$3,000)+(30x$3,500)+(5x$4,500)+(5x$4,800) …
$211,500.00
b. LIFO
(5 x $3,000) ………………………………………………………
$15,000.00
(15x$3,000)+(30x$3,500)+(5x$4,500)+(10x$4,800)
$220,500.00
c. Weighted average ($235,500/65=$3,623.08 [rounded])
(5 x $3,623.08)…………………………..………………………
$18,115.40
$235,500 [Goods Available] – $18,115.40 [Ending Inventory] ……
$217,384.60
d. Specific identification
(5 x $4,500) ……………………………………………………….
$22,500.00
$235,500 [Goods Available] – $22,500 [Ending Inventory] ………..
$213,000.00
Problem 5-2B (Concluded)
4.
FIFO
LIFO
Weighted
Average
Specific
Identifi-
cation
Sales* ………………………………..
$770,000
$770,000
$770,000.00
$770,000
Less: Cost of goods sold …...
211,500
220,500
217,384.60
213,000
Gross profit ………………………..
$558,500
$549,500
$552,615.40
$557,000
*Sales = (35 units x $12,000) + (25 units x $14,000) = $770,000
Problem 5-3B (40 minutes)
1. Compute cost of goods available for sale and units available for sale
Beginning inventory ……………………...
150 units @ $300
$ 45,000
May 6 …………………………………………...
350 units @ $350
122,500
May 17 …………………………………………..
80 units @ $450
36,000
May 25 …………………………………………..
100 units @ $458
45,800
Units available ……………………………….
680 units
Cost of goods available for sale ……..
$249,300
2. Units in ending inventory
Units available (from part 1) …………..…………..
680 units
Less: Units sold (180 + 300) …………..…………..
480 units
Ending Inventory (units) ………………..…………
200 units
Problem 5-3B (Continued)
3b. LIFO perpetual
Date
Goods Purchased
Cost of Goods Sold
Inventory Balance
May 1
150 @ $300 = $ 45,000
May 6
350 @ $350 = $122,500
150 @ $300
350 @ $350 = $167,500
May 9
180 @ $350 = $ 63,000
150 @ $300
170 @ $350 = $104,500
May 17
80 @ $450 = $ 36,000
150 @ $300
170 @ $350
80 @ $450 = $140,500
May 25
100 @ $458 = $ 45,800
150 @ $300
170 @ $350
80 @ $450
100 @ $458 = $186,300
May 30
100 @ $458 = $ 45,800
80 @ $450 = $ 36,000
120 @ $350 = $ 42,000
150 @ $300
50 @ $350 = $ 62,500
$186,800
3c. Weighted Average perpetual
Date
Goods Purchased
Cost of Goods Sold
Inventory Balance
May 1
150 @ $300 = $ 45,000
May 6
350 @ $350 = $122,500
150 @ $300
350 @ $350 = $167,500
(avg. = $335)
May 9
180 @ $335 = $ 60,300
320 @ $335 = $107,200
(avg. = $335)
May 17
80 @ $450 = $ 36,000
320 @ $335
80 @ $450 = $143,200
(avg. = $358)
May 25
100 @ $458 = $ 45,800
320 @ $335
80 @ $450
100 @ $458 = $189,000
(avg. = $378)
May 30
300 @ $378 = $113,400
200 @ $378 = $ 75,600
(avg. = $378)
$173,700