Question

Laker Company reported the following January purchases and sales data for its only product.

Date	Activities	Units acquired at cost	Units sold at retail
Jan 1	Beginning Inventory	140 units @ \(6 = \)840
Jan 10	Sales		100 units @ \(15
Jan 20	Purchases	60 units @ \)5 = 300
Jan 25	Sales		80 units @ \(15
Jan 30	Purchases	180 units @ \)4.50 = 810
	Total	380 units for $1,950	180 units

Required

The company uses a perpetual inventory system. 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. (Round per unit costs and inventory amounts to cents.) For specific identification, ending inventory consists of 200 units, where 180 are from the January 30 purchase, 5 are from the January 20 purchase, and 15 are from beginning inventory.

Short answer

Method	Ending inventory	Cost of goods sold
Specific Identification Method	$925	$1,025
Weighted Average Method	$918	$1,032
FIFO	$910	$1,040
LIFO	$930	$1,020

Step-by-step solution

Definition of Ending Inventory

The cost of merchandise that is still not sold and in possession of the business entity is considered ending inventory.

Specific Identification Method

Cost of goods sold:

Particular	Units sold	X	Per unit	=	Total
Beginning inventory	125	X	$6	=	$750
20 Jan Purchase	55	X	$5	=	275
30 Jan Purchase	0	X	$4.50	=	0
The total cost of goods sold	$1,025

Ending inventory:

Particular	Units in Hand	X	Per unit	=	Total
Beginning inventory	15	X	$6	=	$90
20 Jan Purchase	5	X	$5	=	25
30 Jan Purchase	180	X	$4.50	=	810
Total ending inventory	$925

Weighted Average method

Particular	Beginning balance or purchases			Cost of goods sold			Ending Inventory
	Unit	Per unit	Total	Unit	Per unit	Total	Unit	Per unit	Total
Beginning inventory	140	$6	$840				140	$6	$840
Jan 10				100	$6	$600	40	$6	$240
Jan 20	60	$5	$300				100	$5.4	$540
Jan 25				80	$5.4	$432	20	$5.4	$108
Jan 30	180	$4.50	$810				200	$4.59	$918
				180		$1,032

Cost of goods sold: $1,032.

Ending inventory: $918.

FIFO

Particular	Beginning balance or purchases			Cost of goods sold			Ending Inventory
	Unit	Per unit	Total	Unit	Per unit	Total	Unit	Per unit	Total
Beginning inventory	140	$6	$840				140	$6	$840
Jan 10				100	$6	$600	40	$6	$240
Jan 20	60	$5	$300				40	$6	$240
							60	$5	$300
Jan 25				40	$6	$240
				40	$5	$200	20	$5	$100
Jan 30	180	$4.5	$810				20	$5	$100
							180	$4.5	$810
Total				180		$1,040	200		$910

Cost of goods sold: $1,040.

Ending inventory: $910.

LIFO

Particular	Beginning balance or purchases			Cost of goods sold			Ending Inventory
	Unit	Per unit	Total	Unit	Per unit	Total	Unit	Per unit	Total
Beginning inventory	140	$6	$840				140	$6	$840
Jan 10				100	$6	$600	40	$6	$240
Jan 20	60	$5	$300				40	$6	$240
							60	$5	$300
Jan 25				60	$5	$300
				20	$6	$120	20	$6	$120
Jan 30	180	$4.50	$810				20	$6	$120
							180	$4.50	$810
Total				180		$1,020	200		$930

Cost of goods sold: $1,020.

Ending inventory: $930.