Lakie uses a perpetual inventory system. Ending inventory consists of 500 units, 400 from the July 28 purchase and 100 from the Dec19 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
To determine the cost assigned to ending inventory and to cost of goods sold using different inventory costing methods, we need to consider the specific identification, weighted average, FIFO (First-In, First-Out), and LIFO (Last-In, First-Out) methods.
(a) Specific Identification Method: This method identifies the actual cost of each specific item in ending inventory and cost of goods sold. In this case, we know that ending inventory consists of 500 units, 400 from the July 28 purchase and 100 from the Dec 19 purchase. Therefore, the cost assigned to ending inventory would be the cost of these specific units, while the remaining units will be assigned to cost of goods sold.
(b) Weighted Average Method: This method calculates the average cost per unit by dividing the total cost of goods purchased by the total number of units purchased. To calculate the cost assigned to ending inventory and cost of goods sold using the weighted average method, we need to know the cost of goods purchased and the number of units purchased throughout the accounting period.
(c) FIFO Method: FIFO assumes that the first units purchased are the first ones sold. In this case, since we know that ending inventory consists of 500 units, with 400 from the July 28 purchase and 100 from the Dec 19 purchase, under FIFO, the cost assigned to ending inventory will be the cost of the December 19 purchase, and the cost of goods sold will be the cost of the July 28 purchase.
(d) LIFO Method: LIFO assumes that the last units purchased are the first ones sold. Using this method, the cost assigned to ending inventory will be the cost of the July 28 purchase, and the cost of goods sold will be the cost of the December 19 purchase.
To determine the specific cost assigned to ending inventory and cost of goods sold with each of the four methods mentioned above, we need additional information such as the cost of each purchase and the number of units purchased in each transaction.