I don't know how to determine the ending inventory/cost of goods available for sales/pretax earning of both FIFO case and average weight case. I put the question, correct answer, and solution for ending inventory below, but I can't understand the solution. could you explain, thank you.

solution

Lunar Company uses a perpetual inventory system. The company's accounting records provided the following information for Product 2: Units Unit Cost 3,800 $10 8 Transactions a. Inventory, December 31, 2019 For the year 2020: b. Purchase, April 11 c. Sale, May 1 ($28 each) d. Purchase, June 1 e. Sale, July 3 ($28 each) f. Operating expenses (excluding income tax expense), $85,800 9,800 5,800 8,800 6,800 11 Required: 1. Prepare a statement of earnings for 2020, through pretax earnings, showing the detailed computation of cost of sales for two cases: a. Case A-FIFO b. Case BWeighted average (Round intermediate calculations to 2 decimal places.) LUNAR COMPANY Statement of Earnings (Partial) For the Year Ended December 31, 2020 Case A Case B FIFO Weighted Average Sales revenue 352,800 $ 352,800 Cost of sales: Beginning inventory 38,000 38,000 Purchases 175,200 175,200 Cost of goods available for sale 213,200 213,200 Ending inventory 104,800 96,530 Cost of sales 108,400 116,670 Gross profit 244,400 236,130 Expenses 85,800 85,800 Pretax earnings 158,600$ 150,330 Ending inventory = 22,400 units available 12,600 units sold = 9,800 units Case A FIFO: (8,800 units @ $11 = $96,800) + (1,000 units @ $8 = $8,000) = $104,800. Case B Weighted Average: WA1 = ($3,800 * $10 + $9,800 * $8) = (3,800 +9,800) units = $8.56 per unit WA2 = (($13,600 - 5,800) * $8.56 + $8,800 * 11) = (8,800 + 7,800) units = $9.85 per unit Cost of ending inventory = 9,800 units * $9.85 = $96,530