Inventory Valuation

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AC216Unit1Assignment4-InventoryMethods.xlsx
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Inventory Methods

Inventory Calculations
Arlington Company uses a periodic inventory system. It entered into the following purchases and sales transactions for March. Units sell for $85 per unit. Inventory costs are calculated at the end of the month.
Units Sold cost
Date Activities Units Sold Cost
1-Mar Beginning inventory 100 50
5-Mar Purchase 400 55
9-Mar Sales 420
16-Mar Purchase 120 60
25-Mar Purchase 200 62
29-Mar Sales 160
For specific identification, the March 9 sale consisted of 80 units from beginning inventory and 340 units from the March 5 purchase; the March 29 sale consisted of 40 units from the March 16 purchase and 120 units from the March 25 purchase.
a. Compute the Goods available for sale and the number of units for sale
Cost of Goods Available for Sale
# of Units Cost per Unit Cost of Goods Available for Sale
Beginning inventory
Purchases:
5-Mar
16-Mar
March 25
Total
b. Compute the number of units in ending inventory.
Units available
Less: Units sold
Ending inventory (units)
c. Compute the cost of ending inventory using the FIFO method
Date Activities Units Sold Cost
1-Mar Beginning inventory 100 50
5-Mar Purchase 400 55
9-Mar Sales 420
16-Mar Purchase 120 60
25-Mar Purchase 200 62
29-Mar Sales 160
FIFO Cost of Goods Sold Ending Inventory
Date Units sold units Cost per unit Cost of goods sold # ending inventory Cost per unit $ Ending Inventory
Sales
1-Mar
5-Mar
16-Mar
25-Mar
Totals
d. Compute the cost of ending inventory using the LIFO method
Date Activities Units Sold Cost
1-Mar Beginning inventory 100 50
5-Mar Purchase 400 55
9-Mar Sales 420
16-Mar Purchase 120 60
25-Mar Purchase 200 62
29-Mar Sales 160
LIFO Cost of Goods Sold Ending Inventory
Date Units sold units Cost per unit Cost of goods sold # ending inventory Cost per unit $ Ending Inventory
Sales
25-Mar
16-Mar
5-Mar
1-Mar
Totals
e. Compute the cost of ending inventory using the Specific Identification method
For specific identification, the March 9 sale consisted of 80 units from beginning inventory and 340 units from the March 5 purchase; the March 29 sale consisted of 40 units from the March 16 purchase and 120 units from the March 25 purchase.
Date Activities Units Sold Cost
1-Mar Beginning inventory 100 50
5-Mar Purchase 400 55
9-Mar Sales 420
16-Mar Purchase 120 60
25-Mar Purchase 200 62
29-Mar Sales 160
SPEC ID Cost of Goods Sold Ending Inventory
Date Units sold units Cost per unit Cost of goods sold # ending inventory Cost per unit $ Ending Inventory
Sales
1-Mar
5-Mar
16-Mar
25-Mar
Totals
f. Compute the cost of ending inventory using the Weighted Average method
Date Activities Units Sold Cost
1-Mar Beginning inventory 100 50
5-Mar Purchase 400 55
9-Mar Sales 420
16-Mar Purchase 120 60
25-Mar Purchase 200 62
29-Mar Sales 160
Average Cost of Goods Sold Ending Inventory
Date Units sold units Cost per unit Cost of goods sold # ending inventory Cost per unit $ Ending Inventory
Sales
1-Mar
5-Mar
16-Mar
25-Mar
Totals
Cost of goods sold
g. Compute Gross margin for each inventory costing methods
FIFO LIFO Spec ID Average
Units Sold
price per unit
total sales
Cost of Goods Sold
Gross Margin
Ending Inventory