# The table starts with beginning inventory consisting

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Chapter 7 / Exercise 7-6
Accounting
Reeve/Warren
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cost of goods sold and ending inventory amounts.The table starts with beginning inventory consisting of 10 units at \$91 each.On August 3, 15 more units are purchased at \$106 each for \$1,590. Inventory available now consists of 25 units costing \$2,500 (or \$910 + \$1,590).On August 14, 20 units are sold. Applying FIFO, the first 10 sold cost \$91 each. The next 10 sold cost \$106 each. The total cost of goods sold is \$1,970 (or \$910+ \$1,060). This leaves 5 units costing \$530 (or \$2,500 - \$1,970) in inventory.On August 17, 20 units costing \$2,300 are purchased, and on August 28, another 10 units costing \$1,190 are purchased, for a total of 35 units costing \$4,020 (or \$530 + \$2,300 + \$1,190) in inventory.Specific Identification
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Chapter 7 / Exercise 7-6
Accounting
Reeve/Warren
Expert Verified
On August 31, 23 units are sold. Applying FIFO, the first 5 units sold cost \$106 each. Thenext 18 sold cost \$115 each. This leaves 12 units costing \$1,420 (or \$4,020 - \$2,600) in inventory.The last-in, first-out (LIFO)method of assigning costs assumes that the most recent purchases are sold first. These more recent costs are charged to the goods sold, and the costs of the earliest purchases are assigned to inventory. As with other methods, LIFO is acceptable even when the physical flow of goods does not follow a last-in, first-out pattern. One appeal of LIFO is that by assigning costs from the most recent purchases to cost of goods sold, LIFO comes closest to matching the current costs of goods sold with revenues (compared FIFO or weighted average). Applying LIFO, we can prepare a table to determine the cost of goods sold and ending inventory amounts.The table starts with beginning inventory consisting of 10 units at \$91 each.On August 3, 15 more units are purchased at \$106 each for \$1,590. Inventory available now consists of 25 units costing \$2,500 (or \$910 + \$1,590).On August 14, 20 units are sold. Applying LIFO, the first 15 sold cost \$106 each. The next 5 sold cost \$91 each. The total cost of goods sold is \$2,045 (or \$1,590 + \$455). This leaves 5 units costing \$455 (or \$2,500 - \$2,045) in inventory.First-in, First-out (FIFO)
On August 17, 20 units costing \$2,300 are purchased, and on August 28, another 10 units costing \$1,190 are purchased, for a total of 35 units costing \$3,945 (or \$455 + \$2,300 + \$1,190) in inventory.On August 31, 23 units are sold. Applying FIFO, the first 10 units sold cost \$119 each. The next 13 sold cost \$115 each. This leaves 12 units costing \$1,260 (or \$3,945 - \$2,685)in inventory.The weighted averagemethod of assigning cost requires that we use the weighted average cost per unit to determine the cost of good sold. As such, at the time of each sale, the weighted average cost per unit must be calculated. The weighted average cost per unit equals the cost of goods available for sale divided by the units available for sale. Applying weighted average, we can prepare a table to determine the cost of goods sold and ending inventory amounts.The table starts with beginning inventory consisting of 10 units at \$91 each.On August 3, 15 more units are purchased at \$106 each for \$1,590. Inventory available now consists of 25 units costing \$2,500 (or \$910 + \$1,590).