Question

A company sells a climbing kit and uses the perpetual inventory system to account for its merchandise. The beginning balance of the inventory and its transactions during January were as follows: January 1: Beginning balance of 18 units at $13 each January 12: Purchased 30 units at $14 each January 19: Sold 24 units at $30 selling price each January 20: Purchased 24 units at $17 each January 27: Sold 27 units at $30 selling price each If the ending inventory is reported at $276, what inventory method was used? A. LIFO method. B. FIFO method. C. Weighted average method. D. Specific identification method. E. Retail inventory method.

          A company sells a climbing kit and uses  the perpetual inventory system to account for its merchandise. The  beginning balance of the inventory and its transactions during January  were as follows:            January 1:                                Beginning balance of 18 units at $13 each                              January 12:                                Purchased 30 units at $14 each                              January 19:                                Sold 24 units at $30 selling price each                              January 20:                                Purchased 24 units at $17 each                              January 27:                                Sold 27 units at $30 selling price each                  If the ending inventory is reported at $276, what inventory method was used?      A. LIFO method.      B. FIFO method.      C. Weighted average method.      D. Specific identification method.      E. Retail inventory method.

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Added by Susan J.

Horngren’s Cost Accounting

Srikant M. Datar, Madhav V. Rajan 16th Edition

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Solved by Expert Kevra Barney

08/04/2022

Step 1

- Beginning inventory: 18 units at $13 each = $234 - January 12 purchase: 30 units at $14 each = $420 - January 20 purchase: 24 units at $17 each = $408 Total cost of goods available for sale = $234 + $420 + $408 = $1,062 Show more…

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A company sells a climbing kit and uses the perpetual inventory system to account for its merchandise. The beginning balance of the inventory and its transactions during January were as follows: January 1: Beginning balance of 18 units at $13 each January 12: Purchased 30 units at $14 each January 19: Sold 24 units at $30 selling price each January 20: Purchased 24 units at $17 each January 27: Sold 27 units at $30 selling price each If the ending inventory is reported at $276, what inventory method was used? A. LIFO method. B. FIFO method. C. Weighted average method. D. Specific identification method. E. Retail inventory method.

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Transcript

00:01 Okay, so this problem is just helping us to figure, wanting us to figure out which inventory method is used based on the information we're given.

00:13 So let's write down what we are given.

00:16 So let's just make a chart.

00:18 We have the date.

00:21 And we have the units purchased.

00:25 The price per unit.

00:31 And then the total price.

00:39 Make sure that is legible.

00:41 Here we go.

00:44 Okay, so the first is just beginning inventory on january 1st.

00:50 And that is 18 units at $13, which is a total of $234.

01:00 The next one is on the 12th, and that is 30 units at $14, which is a total of $420, and i'm just multiplying those numbers together to get my total.

01:17 I just want to make a note that there's a sale right here that we're going to look into, but then there's also one more purchase on the 20th for 24 units at $17, which is $408.

01:41 This gives us a total of 1062.

01:46 That's our cost of goods.

01:49 And then there's also a sale here.

01:51 So i'm just going to note sale.

01:55 So right off the bat, i don't think the retail method or the specific identification method are valid for this.

02:06 So i wouldn't, you can, i mean, try to calculate it, but i don't.

02:12 Especially the specific identification method, it's not for this type of problem.

02:19 So i think it's not going to be the answer...

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