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Question

file:l/home/chronos/u-85e4d13e1f5f79c17331679e7acff44938753b65/Downloads/Fundamenta...Qe Exercise 6-144 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 p chases. Determine the cost assigned to ending inventory and to cost of goods sold using (a) specifi identification, (b) weighted average, (c) FIFO, and (d) LIFO. (Round per unit costs and inventory amour to cents.) Which method yields the highest net income? Jan. 1 Beginning inventory. Mar. 7 Purchase. 96 units@$2.00-$ 192 220 units @ $2.25495 544 units @ $2.50 = 1.360 480 units@ $2.801,344 160 units @ $2.90464 $3,855 Oct. 3 Purchase... eck Inventory, LIFO, 13.50; FIFO, $435.00 Totals 1,500 units

Explanation / Answer

Solution:-

FIFO method yields the highest income:-

Working notes:-

(a):- Specific identification:-

= 96 * 2

= $192

= 220 * 2.25

= $ 495

= 544 * 2.50

= $1,360

=(54 - 50)

= 494

= 494*2.50

= $1,235

= 50 * 2.50

= $125

= 480 * 2.80

= 1,344

= 480 - 50

= 430

= 430 * 2.80

= $1,204

= 50 * 2.80

= $140

= 160 * 2.90

= $464

=160 - 50

= 110

= 110 * 2.90

= $319

50

= 50 * 2.90

= $145

= 96 + 220 + 544 + 480 + 160

= 1,500

= 192 + 495 + 1,360 + 1,344 + 464

= $3,855

= 96 + 220 + 494 + 430 + 464

= 1,350

= 192 + 495 + 1235 + 1204 + 319

= $3,445

= 50 + 50 + 50

= $150

= 125 + 140 + 145

= $410

(b). Weighted average:-

= 1,350 * 2.57

= $3,469.5

= 150 * 2.57

= $385.5

(c).FIFO:-

= 160 - 150

= 10

= 10 * 2.90

$29

= 150 * 2.90

= $435

= 192 + 495 + 1,360 + 1,344 + 29

= $3,420

(d).LIFO:-

= 220 - 54

= 166

= 166 * 2.25

= $373.50

= 2.25 * 54

= $121.50

= 96 + 54

= 150

= 192 + 121.5

= $313.50

Specific identification Weighted average FIFO LIFO Ending inventory $410 $385.50 $435 $313.50 Cost of goods sold $3,445 $3,469.50 $3,420 $3,541.50

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