Tool City,Inc.had 300 cordless screwdrivers on hand at January 1,2015 costing $45 each.Purchases and sales of cordless screwdrivers during the month of January were as follows:
$75@$77\begin{array}{lll}\text { Date } & \text { Purchases } & \text { Sales }\\\text { January } 9 & & 200 @ \$ 75 \\\text { January 14 } & 100 @ \$ 47 \\\text { January 23 } && 75 @ \$ 76 \\\text { January 25 } & 100 @ \$ 48 &\\ \text { January 30 } && 75 @ \$ 77 \end{array}$
Tool City does not maintain perpetual inventory records.According to a physical count,150 cordless screwdrivers were on hand at January 31,2015.
Required:
a.What is the cost of the inventory at January 31,2015 under the FIFO method?
b.What is the cost of the inventory at January 31,2015 under the LIFO method?
c.What is the cost of the inventory at January 31,2015 under the FIFO method if only 145 cordless screwdrivers were on hand at the time of the physical count? Based on the data given,what is the most likely explanation for the fact that only 145 cordless screwdrivers were actually counted?

Question

Tool City,Inc.had 300 cordless screwdrivers on hand at January 1,2015 costing $45 each.Purchases and sales of cordless screwdrivers during the month of January were as follows:

75@$77\begin{array}{lll}\text { Date } & \text { Purchases } & \text { Sales }\\\text { January } 9 & & 200 @ \$ 75 \\\text { January 14 } & 100 @ \$ 47 \\\text { January 23 } && 75 @ \$ 76 \\\text { January 25 } & 100 @ \$ 48 &\\ \text { January 30 } && 75 @ \$ 77 \end{array}

Tool City does not maintain perpetual inventory records.According to a physical count,150 cordless screwdrivers were on hand at January 31,2015.
Required:
a.What is the cost of the inventory at January 31,2015 under the FIFO method?
b.What is the cost of the inventory at January 31,2015 under the LIFO method?
c.What is the cost of the inventory at January 31,2015 under the FIFO method if only 145 cordless screwdrivers were on hand at the time of the physical count? Based on the data given,what is the most likely explanation for the fact that only 145 cordless screwdrivers were actually counted?

Karen Tamacas · Accepted Answer

Final Answer :  a. FIFO  January 25  100 @ $ 48 $ 4 , 800  January 14  50 @ $ 47 $ 2 , 350 Ending Inventory under FIFO  150  Units  $ 7 , 150 \begin{array}{rcc}	ext { January 25 }  &  100 @ \$ 48  &  \$ 4,800 \	ext { January 14 }  &  50 @ \$ 47  &  \$ 2,350 \	ext {Ending Inventory under FIFO }  &  150 	ext { Units }  &  \mathbf{\$ 7 ,1 5 0}\end{array}  January 25   January 14  Ending Inventory under FIFO  ​ 100@$48 50@$47 150  Units  ​ $4 , 800 $2 , 350 $7 , 150 ​ b. LIFO  Beginning Inventory  150 @ $ 45 $ 6 , 750  Ending Inventory under LIFO  150  Units  $ 6 , 750 \begin{array}{rrr}	ext { Beginning Inventory }  &  150 @ \$ 45  &  \mathbf{\$ 6 , 7 5 0} \	ext { Ending Inventory under LIFO }  &  150 	ext { Units }  &   \mathbf{\$ 6 , 7 5 0}\end{array}  Beginning Inventory   Ending Inventory under LIFO  ​ 150@$45 150  Units  ​ $6 , 750 $6 , 750 ​ c. FIFO  January  25 100 @ $ 48 $ 4 , 800  January  14 45 @ $ 47 $ 2 , 115 ‾  Ending Inventory under FIFO  145  Units  6 , 915 ‾ \begin{array}{rcc}	ext { January } 25  &  100 @ \$ 48  &  \$ 4,800 \	ext { January } 14  &  45 @ \$ 47  &  \underline{\$ 2,115} \	ext { Ending Inventory under FIFO }  &  145 	ext { Units }  &  \underline{\mathbf{6 , 9 1 5}}\end{array}  January  25  January  14  Ending Inventory under FIFO  ​ 100@$48 45@$47 145  Units  ​ $4 , 800 $2 , 115 ​ 6 , 915 ​ ​   The 5 units are most likely missing due to inventory shrinkage.

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