Reference no: EM132704109
Azure Games Inc. is a New Jersey online gadget retailer. The company uses the LIFO periodic inventory valuation method and applies the lower of cost or market rule whenever necessary to value inventories. The company placed an order for 100 newer gadgets in October 2020 from a Vietnamese gadget-maker for $1.30 a unit, including shipping costs f.o.b. shipping point. The order has already shipped, but it is not expected to be delivered until January 10, 2021. The order for the 100 new gadgets has not been paid or recorded.
Azure Games has 22 gadgets on hand in its warehouse on December 31, 2020 (see the inventory records table below). The company has announced it will hold a 50%-off sale in January 2021 to dispose of the gadgets in ending inventory to make room for the newer gadgets. These gadgets usually sell for $1.80 each, but the sales price would be reduced by 50% to $0.90 during the sale. Under the company's LIFO Periodic inventory valuation assumption, the gadgets in ending inventory slated for the 50%-off sale in January 2021 are assumed to come from the earliest purchases.
The company's inventory records for the year are provided in the following table:
|
Begin. Inventory 1/1/2020
|
Units
|
Cost per unit
|
Total
|
|
20
|
$ 0.80
|
16.00
|
|
Purchases 3/25/2020
|
88
|
1.00
|
88.00
|
|
Purchases 8/19/2020
|
420
|
1.28
|
537.60
|
|
Goods Available for Sale
|
528
|
|
$ 641.60
|
|
Units Sold
|
506
|
|
|
Required:
Question i. What is the reported number of units in ending inventory on December 31, 2020?
Question ii. Determine the Cost of Ending Inventory on December 31, 2020.
Question iii. What is the cost of Goods Sold for the year ended December 31, 2020.