Question

Beech Soda, Inc. uses a perpetual inventory system. The company's beginning inventory of a particular product and its purchases during the month of January were as follows:

Quantity Unit Cost Total Cost
Beginning inventory (Jan. 1) 17 8 136
Purchase (Jan. 11) 9 14 126
Purchase (Jan. 20) 20 16 320
Total 46 582

On January 14, Beech Soda, Inc. sold 22 units of this product. The other 24 units remained in inventory at January 31. Assuming that Beech Soda uses the LIFO cost flow assumption, the cost of goods sold to be recorded at January 14 is:__________

Answer 1

Answer:

the cost of goods sold to be recorded at January 14 is: $230 .

Explanation:

LIFO (Last in First out) method, assumes that the last goods purchased are the first ones to be issued to the final customer.

This means that valuation of inventory will begin using the value of the earliest goods purchased.

The Cost of goods sold is calculated as follows :

Cost of goods sold : 9 units × $14 = $126

                                  13 units × $8 = $104

                                  Total              = $230

Answer 2

Answer:

$230

Explanation:

                                             Quantity          Unit Cost           Total Cost

Beginning inventory (Jan. 1)      17                   $8                    $136        

Purchase (Jan. 11)                       9                   $14                    $126

Purchase (Jan. 20)                    20                  $16                   $320

Total                                           46                                           $582

sales:

January 14, 22 units sold

cost of goods sold under LIFO = (9 x $14) + (13 x $8) = $126 + $104 = $230

cost of goods sold under FIFO = (5 x $14) + (17 x $8) = $70 + $136 = $206

cost of goods sold under average cost = ($262 / 26) x 22 = $221.69