Kudos Leather Goods purchased the following items during the month of April:
1. April 12, 34 wallets @ $12.95 each
2. April 08, 24 wallets @ $13.10 each
3. April 18, 15 wallets @ $13.25 each
4. April 26, 20 wallets @ $13.27 each
On April 1, the business had an inventory of 19 wallets valued at $12.90 each. On April 30, the business had 36 wallets in inventory. Of those wallets, 8 were purchased on April 2, 15 were purchased on April 8, 3 were purchased on April 18, and 10 were purchased on April 26.
Calculate the cost of the ending inventory using the following methods:
a. Specific identification method
b. FIFO method
c. LIFO method
d. Weighted average cost method
Also, find the cost of merchandise sold under each method.
Y
To calculate the cost of the ending inventory and the cost of merchandise sold under each method, we'll need to follow these steps:
1. Specific Identification Method:
Under this method, we will consider the cost of each specific item in the ending inventory and match it with the cost of the corresponding item sold.
To calculate the cost of the ending inventory:
Multiply the quantity of each remaining wallet in the ending inventory by their respective purchase cost and sum them up.
To calculate the cost of merchandise sold:
Multiply the quantity of each wallet sold by their respective purchase cost and sum them up.
2. FIFO Method (First-in, First-out):
Under this method, we assume that the items purchased first are sold first.
To calculate the cost of the ending inventory:
Multiply the quantity of each remaining wallet in the ending inventory by their respective purchase cost and sum them up, starting from the earliest purchases.
To calculate the cost of merchandise sold:
Multiply the quantity of each wallet sold by their respective purchase cost and sum them up, starting from the earliest purchases.
3. LIFO Method (Last-in, First-out):
Under this method, we assume that the items purchased most recently are sold first.
To calculate the cost of the ending inventory:
Multiply the quantity of each remaining wallet in the ending inventory by their respective purchase cost and sum them up, starting from the latest purchases.
To calculate the cost of merchandise sold:
Multiply the quantity of each wallet sold by their respective purchase cost and sum them up, starting from the latest purchases.
4. Weighted Average Cost Method:
Under this method, we calculate the average cost per unit based on the total cost of goods available for sale divided by the total number of units available for sale.
To calculate the cost of the ending inventory:
Multiply the quantity of each remaining wallet in the ending inventory by the weighted average cost per unit and sum them up.
To calculate the cost of merchandise sold:
Multiply the quantity of each wallet sold by the weighted average cost per unit and sum them up.
Once you have all the necessary information, plug in the numbers into the respective formulas for each method, and perform the calculations to find the answers.