Shawn Company had 286 units In beginning inventory at a total cost of $30,030. T

Question

Shawn Company had 286 units In beginning inventory at a total cost of $30,030. The company purchased 572 units at a total cost of $74,360. At the end of the year. Shawn bad 215 units in ending inventory. Compute the cost of the ending inventory and the cost of goods sold under FIFO, LIFO, and average-cost. (Round average-cost per unit and final answers to 0 decimal places, e.g. 1, 250.) Which cost flow method would result in the highest net income? Which cost flow method result in inventories approximating current cost in the balance sheet?

Explanation / Answer

FIFO Date Particulars Units   Cost Amount COGS Beginning                                    286.00                       105.00                          30,030.00 Purchase                                    572.00                       130.00                          74,360.00 Total                                    858.00                        104,390.00 COGS                                    643.00                          76,440.00 286*105 + 357*130 Closing Stock                                    215.00                          27,950.00 215*130 COGS              76,440.00 Closing Stock              27,950.00 LIFO Date Particulars Units   Cost Amount COGS Beginning                                    286.00                       105.00                          30,030.00 Purchase                                    572.00                       130.00                          74,360.00 Total                                    858.00                        104,390.00 COGS                                    643.00                          81,815.00 572*130 + 71*105 Closing Stock                                    215.00                          22,575.00 215*105 COGS              81,815.00 Closing Stock              22,575.00 Weighted Average Date Particulars Units   Cost Amount COGS Beginning                                    286.00                       105.00                          30,030.00 Purchase                                    572.00                       130.00                          74,360.00 Total                                    858.00                       121.67                        104,390.00 COGS                                    643.00                       121.67                          78,231.67 643*121.67 Closing Stock                                    215.00                       121.67                          26,158.33 215*121.67 COGS              78,231.67 Closing Stock              26,158.33 FIFO would result in highest income sincen COGS is lowest in FIFO FIFO as we have assumed inventory purchased first is sold first thus Ending Inventory majorly consists of units purchased at last

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