Inventory Valuation Problems 4.8 and 4.

Problems 4.8 and 4.9 focus on inventory valuation.

Problem 4.8

Bob’s Soda Company (BSC) commences the month of January with 500 cases of soda in inventory
for which it paid $5.00 per case (total of $2,500). The transactions set forth below occurred during
the month of January. Assume that each time BSC sold a case of soda, the case was sold for
$10.00. Also assume that BSC uses a perpetual inventory system.

January 4: BSC buys 400 cases of soda for a total cost of $2,400.

January 7: BSC sells 120 cases of soda for a total of $1,200.

January 12: BSC sells 110 cases of soda for a total of $1,100.

January 16: BSC sells 290 cases of soda for a total of $2,900.

January 21: BSC buys 340 cases of soda for a total cost of $1,785.

January 23: BSC sells 150 cases of soda for a total of $1,500.

January 26: BSC sells 320 cases of soda for a total cost of $3,200.

January 29: BSC buys 70 cases of soda for a total of $357.

BSC undertook a physical inventory count on January 31 and determined it held 320 remaining
cases of soda in inventory. Calculate the value of COGS, ending inventory, revenues, and gross
profit for the month of January under each of the following methods:

Part A: FIFO

This table sets forth the COGS and ending inventory for the month of January under
FIFO:
The following sets forth the calculation of Revenues and Gross Profit for the month
of January based on the about information:
Part B: LIFO

This table sets forth the COGS and ending inventory for the month of January under
LIFO:

The following sets forth the calculation of Revenues and Gross Profit for the month
of January based on the about information:
Part C: Weighted Average

This table sets forth the value of the calculation of the weighted average per unit
cost for the month of January:

Weighted Average = $7,042 /1310

Weighted Average = $5.38 per unit
Part D: Specific Identification (assume that ending inventory includes 90 cases from beginning
inventory, 90 cases purchased on January 4, 110 cases purchased on January 21, and 30 cases
purchased on January 29).

This table sets forth the value of ending inventory and COGS for the month of
January under specific identification:
Problem 4.9

Comic Emporium, Inc.’s (CEI) quarterly inventory record for the last quarter of the fiscal year
(October 1 to December 31) is set forth below:

CEI INVENTORY FOR THE OCTOBER 1-DECEMBER 31 QUARTER

CEI undertook a physical inventory on December 31 and determined it had 2,200 comic books
remaining in inventory. Assuming CEI’s sales for the quarter were $86,000, calculate the value of
COGS and gross profit for the quarter ending December 31 under each of the following methods:

Part A: FIFO
This table sets forth the COGS and ending inventory for the fourth quarter under
FIFO:
Part B: LIFO
This table sets forth the COGS and ending inventory for the fourth quarter under
LIFO:
Part C: Weighted Average
This table sets forth the weighted average per unit calculation for the fourth
quarter:
Weighted Average = $58,820 /7000
Weighted Average = $8.40 per unit
Part D: Specific Identification (assume that ending inventory includes 80 comic books from
beginning inventory, 160 comic books purchased on October 27, 138 comic books purchased on
November 14, 391 comic books purchased on November 29, 491 comic books purchased on
December 4, and 940 comic books purchased on December 30).

This table sets forth the value of ending inventory and COGS for the fourth quarter
under specific identification: