Cost flow assumptions-FIFO, LIFO, and weighted average using a periodic system The following data are available for Sellco for the fiscal year
ended on January 31, 2014:
|
|
Units
|
Unit Price
|
$
|
|
Sales
|
3,200
|
|
|
|
Beginning Inventory
|
1,000
|
$4.00
|
$4,000
|
|
Purchases -in date order
|
1,200
|
$5.00
|
$6,000
|
|
1,600
|
$6.00
|
$9,600
|
|
800
|
$8.00
|
$6,400
|
Required:
a. Calculate cost of goods sold and ending inventory under the following cost flow assumptions (using a periodic inventory system):
1. FIFO.
|
|
Units
|
Unit Price
|
$
|
$
|
|
Beginning Inventory
|
1,000
|
$4.00
|
|
$4,000
|
|
Purchases
|
|
|
|
1,200
|
$5.00
|
$6,000
|
|
|
1,600
|
$6.00
|
$9,600
|
|
800
|
$8.00
|
$6,400
|
$22,000
|
|
Available
|
4,600
|
|
|
$26,000
|
|
Ending Inventory (1,000 +3,600 less 3,200) = 1,400
|
|
|
|
|
|
|
|
|
|
|
$0
|
2. LIFO
|
|
Units
|
Unit Price
|
$
|
$
|
|
Beginning Inventory
|
1,000
|
$4.00
|
|
$4,000
|
|
Purchases
|
|
|
|
1,200
|
$5.00
|
$6,000
|
|
|
1,600
|
$6.00
|
$9,600
|
|
800
|
$8.00
|
$6,400
|
$22,000
|
|
Available
|
4,600
|
|
|
$26,000
|
|
Ending Inventory (1,000 +3,600 less 3,200) = 1,400
|
|
|
|
|
|
|
|
|
|
|
$0
|
3. Weighted average. Round the unit cost answer to two decimal places and ending inventory to the nearest $10.
|
Beginning Inventory
|
1,000
|
$4.00
|
|
$4,000
|
|
Purchases
|
|
|
|
1,200
|
$5.00
|
$6,000
|
|
|
1,600
|
$6.00
|
$9,600
|
|
800
|
$8.00
|
$6,400
|
$22,000
|
|
Available
|
4,600
|
|
|
$26,000
|
|
Weighted Average
|
|
|
|
|
Cost of Goods sold-3,200 units
|
|
|
Ending Inventory
|
|
|
b. Assume that net income using the weighted-average cost flow assumption is $116,000. Calculate net income under FIFO and LIFO.
Weighted Average proof
Income
CGS
Sales value
FIFO Income
Sales
CGS
Net Income
LIFO Incme
Sales
CGS
Net Income