LoBianco Company\'s record of transactions for the month of April was as follows

Question

LoBianco Company's record of transactions for the month of April was as follows.


Purchases

Sales

April 1 (Balance on hand) 600 @ $6.00 April 3 500 @ $10.00
4 1,500 @ $6.08 9 1,300 @ $10.00
8 800 @ $6.40 11 600 @ $11.00
13 1,200 @ $6.50 23 1,200 @ $11.00
21 700 @ $6.60 27 900@ $12.00
29 500 @ $6.79 4,500
5,300



(a) Assuming that periodic inventory records are kept in units only, compute the inventory at April 30 using (1) LIFO and (2) average cost.



LIFO $
Average Cost $


(b) Assuming that perpetual inventory records are kept in dollars, determine the inventory using (1) FIFO and (2) LIFO.



FIFO $
LIFO $


(c) Compute cost of goods sold assuming periodic inventory procedures and inventory priced at FIFO.



Cost of goods sold $


(d) In an inflationary period, which inventory method–FIFO, LIFO, average cost–will show the highest net income?

LIFO FIFO

Explanation / Answer

(a) 1. LIFO 600 @ $6.00 = $3,600 200 @ $6.08 = 1,216 $4,816 2. Average cost Total cost = $33,655* = $6.35 average cost per unit Total units 5,300 800 @ $6.35 = $5,080 *Units Price Total Cost 600 @ $6.00 = $ 3,600 1,500 @ $6.08 = 9,120 800 @ $6.40 = 5,120 1,200 @ $6.50 = 7,800 700 @ $6.60 = 4,620 500 @ $6.79 = 3,395 5,300 $33,655 (b) 1. FIFO 500 @ $6.79 = $3,395 300 @ $6.60 = 1,980 $5,375 2. LIFO 100 @ $6.00 = $ 600 200 @ $6.08 = 1,216 500 @ $6.79 = 3,395 $5,211 (c) Total merchandise available for sale $33,655 Less inventory (FIFO) 5,375 Cost of goods sold $28,280 (d) FIFO.

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