Question 1
Inventory records for dunbar incorporated revealed the following
| Date | Transaction | Number of units | Unit cost |
|---|---|---|---|
| Apr. 1 | Beginning inventory | 500 | $2.40 |
| Apr. 20 | Purchase | 400 | $2.50 |
Dunbar sold 700 units of inventory during the month. Ending inventory assuming LIFO would be
A. $500
B. $490
C. $470
D. $480
Question 2
Inventory records for Dunbar Incorporated revealed the following:
| Date | Transaction | No. of units | Unit cost |
|---|---|---|---|
| Apr. 1 | Beginning inventory | 440 | $2.31 |
| Apr. 20 | Purchase | 430 | $2.70 |
Dunbar sold 600 units of inventory during the month Ending inventory assuming FIFO would be _____.
a. $1,016
b. $1,188
c. $729
d. $624
Question 3
Inventory Records For Dunbar Incorporated Revealed The Following Number Of Unit 100 Date Transaction A L Leginning Inventory Apr 20 Purchase Unit Coul SIR >0 Total Cou S7,200.00 51125000 D Harsold 700 Units Of Inventory During The Month Cost Of Goods Sold Assuming FIFO Would Be ASSO B. 512.000 C.513.950 D. 515.750 13. Inventory Records For Dunbar This problem has been solved!
Answer to question 1
Under LIFO, we assume that the 700 units of inventory sold are from later acquired inventory first and that any ending inventory is made up of beginning inventory. We subtract the 700 units against the purchase on the 20th first:
- 400 – 700 = – 300
We subtract this from the beginning inventory:
- 500 – 300 = 200
We multiply this by the value-per-unit of beginning inventory to find the value of ending inventory:
- 200 × $2.40 = d) $480
Answer to question 2
The ending inventory assuming FIFO would be $729 (c).
A proper explanation is shown below.
| Date | Purchases | Sales | Ending inventory | ||||||
|---|---|---|---|---|---|---|---|---|---|
| No. of units (A) | Unit cost (B) | Amount (C = A * B) | No. of units (A) | Unit cost (B) | Amount (C = A * B) | No. of units (A) | Unit cost (B) | Amount (C = A * B) | |
| Apr. 1 | 440 | $2.31 | $1,016.40 | ||||||
| Apr. 20 | 430 | $2.70 | $1,161 | 440 | $2.31 | $1,016.40 | |||
| 430 | $2.70 | $1,161 | |||||||
| Apr. 30 | 440 | $2.30 | $1,012 | ||||||
| 160 | $2.70 | $432 | 270 | $2.70 | $729 | ||||
| Total | 270 | $2.70 | $729 |
Answer to question 3
12) Cost of goods sold under FIFO = (400*18+300*22.50) = 13950
So answer is c) $13950
13) Cost of goods sold under LIFO = (500*22.50+200*18) = 14850
So answer is d) $14850
14) Cost per unit = (11250+7200)/900 = 20.50
Ending inventory = (900-700)*20.50 = 4100
So answer is b) $4100