Inventory Subsidiary ledger A separate subsidiary account is maintained for each item in inventory. Item LL002 Primary supplier Electronic City Description Laser Light Secondary supplier Electric Company Location store room 2 Inventory level: Min:_25 Max: _200 Purchased Sold Balance Cost of Unit Unit Goods Date Units CostTotal Units Cost Sold Units OS Tota sept.5100$30$3,000 100$30$3,000 Sept 9 75 50 3,750 100 30 3,000 75 50 3,750 Sept. 10 10 How can we determine the unit cost for the Irwin/McGraw-Hill Sept. 10 sale? The McGrato-Hni
?The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Inventory Subsidiary Ledger A separate subsidiary account is maintained for each item in inventory. How can we determine the unit cost for the Sept. 10 sale? Item LL002 Primary supplier Electronic City Description Laser Light Secondary supplier Electric Company Location Storeroom 2 Inventory level: Min: 25 Max: 200 Purchased Sold Balance Date Units Unit Cost Total Units Unit Cost Cost of Goods Sold Units Unit Cost Total Sept. 5 100 $ 30 $ 3,000 100 $ 30 $ 3,000 Sept. 9 75 50 3,750 100 30 3,000 75 50 3,750 Sept. 10 10 ? ? ? ? ? ? ? ?
To determine the cost of inventory sold, accountants use one of the following inventory valuation methods Specific Average identification cost FIFO LIFO Irwin/McGraw-Hill ?The McGraw-Hill Companies, Inc., 1999
?The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Specific identification LIFO Average cost FIFO To determine the cost of inventory sold, accountants use one of the following inventory valuation methods
Information for the Following Inventory Examples The Bike Company (TBC) Cost of Goods Available for sale Aug. 1 Beg. Inventory 10 units@ s 91 = 910 Aug. 3 Purchased 15 units@$106=$1,590 Aug. 17 Purchased 20 units@$115=$2,300 Aug. 28 Purchased 10 units@$119=$1,190 Retail sales of goods Aug. 14 Sales s 20 units@$ 130 = 2, 600 Aug. 31 Sales 23 units@$150=$3,450 Irwin/McGraw-Hill ?The McGraw-Hill Companies, Inc., 1999
?The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Information for the Following Inventory Examples Cost of Goods Available for Sale Aug. 1 Beg. Inventory 10 units @ $ 91 = $ 910 Aug. 3 Purchased 15 units @ $ 106 = $ 1,590 Aug. 17 Purchased 20 units @ $ 115 = $ 2,300 Aug. 28 Purchased 10 units @ $ 119 = $ 1,190 Retail Sales of Goods Aug. 14 Sales 20 units @ $ 130 = $ 2,600 Aug. 31 Sales 23 units @ $ 150 = $ 3,450 The Bike Company (TBC)
Specific Identification When units are sold the specific cost of the unit sold is added to cost of goods sold Irwin/McGraw-Hill ?The McGraw-Hill Companies, Inc., 1999
?The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Specific Identification When units are sold, the specific cost of the unit sold is added to cost of goods sold
Specific Identification Example Inventory Date Purchases Cost of goods sold Balance Aug.110@$91 910 910 Aug.315@$106 1590 2,500 On August 14, TBC sold 20 bikes for $130 each Nine bikes originally cost $91 and 11 bikes originally cost $106 Continue Irwin/McGraw-Hill ?The McGraw-Hill Companies, Inc., 1999
?The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Specific Identification Example On August 14, TBC sold 20 bikes for $130 each. Nine bikes originally cost $91 and 11 bikes originally cost $106. Continue Date Purchases Cost of Goods Sold Inventory Balance Aug. 1 10 @ $ 91 = $ 910 $ 910 Aug. 3 15 @ $ 106 = $ 1,590 $ 2,500