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Question

fileM/home/chronos/u 85e4d13e1f5f79c17331679e7acff44938753b65/Downloads/Fundamenta." Q N teo4 000. : : Exercise 6-14A Periodic: Cost flow assumptions P3 Lopez Company reported the following current-year data for its only product. The company uses a peri- odic inventory system, and its ending inventory consists of 150 units-50 from each of the last three pur chases. Determine the cost assigned to ending inventory and to cost of goods sold using (a) specific identification, (b) weighted average, (c) FIFO, and (d) LIFO. (Round per unit costs and inventory amounts to cents.) Which method yields the highest net income Jan. 1 Beginning inventory Mar. 7 Purchase July 28 Purchase.... Oct. 3 Purchase ...4.... 96 units $2.00-S192 220 units $2.25 495 544 units $2.50 1,360 480 units @ $2.80 1.344 .. 160 units @ $2.90- 464 $3,855 Check Inventory, LIFO, $313.50, FIFO, $43500 Totals 1,500 units

Explanation / Answer

Specific identification Weighted average FIFO LIFO Ending inventory 410 385.5 435 313.5 Cost of goods sold 3445 3469.5 3420 3541.5 FIFO method yields the highest net income Calculations: Specific identification: Cost of goods purchased Cost of goods sold Ending inventory Units Unit cost Total Units Unit cost Total Units Unit cost Total 1-Jan 96 2 192 96 2 192 7-Mar 220 2.25 495 220 2.25 495 28-Jul 544 2.5 1360 494 2.5 1235 50 2.5 125 3-Oct 480 2.8 1344 430 2.8 1204 50 2.8 140 19-Dec 160 2.9 464 110 2.9 319 50 2.9 145 Totals 1500 3855 1350 3445 150 410 Weighted average: Cost of goods purchased Cost of goods sold Ending inventory Units Unit cost Total Units Unit cost Total Units Unit cost Total 1-Jan 96 2 192 7-Mar 220 2.25 495 28-Jul 544 2.5 1360 3-Oct 480 2.8 1344 19-Dec 160 2.9 464 Totals 1500 3855 1350 2.57 3469.5 150 2.57 385.5 FIFO: Cost of goods purchased Cost of goods sold Ending inventory Units Unit cost Total Units Unit cost Total Units Unit cost Total 1-Jan 96 2 192 96 2 192 7-Mar 220 2.25 495 220 2.25 495 28-Jul 544 2.5 1360 544 2.5 1360 3-Oct 480 2.8 1344 480 2.8 1344 19-Dec 160 2.9 464 10 2.9 29 150 2.9 435 Totals 1500 3855 1350 3420 150 435 LIFO: Cost of goods purchased Cost of goods sold Ending inventory Units Unit cost Total Units Unit cost Total Units Unit cost Total 1-Jan 96 2 192 96 2 192 7-Mar 220 2.25 495 166 2.25 373.5 54 2.25 121.5 28-Jul 544 2.5 1360 544 2.5 1360 3-Oct 480 2.8 1344 480 2.8 1344 19-Dec 160 2.9 464 160 2.9 464 Totals 1500 3855 1350 3541.5 150 313.5

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