1 Shanrock Company uses the periodic inventory method and had the following inve

Question

1 Shanrock Company uses the periodic inventory method and had the following inventory information avai 1/1 inventory 1/20 Purchase 400 7/25 Purchase 2,400 200 10/20 Purchase 1.400 A physical count of inventory on December 31 revealed that there were 400 units on hand. 600 had been sold. nstructions show cost of Goods sold and Ending Inventory for each of the three methods a. FIFO rning Inventory Y roo Yoo 1(20 Hoo 6 2H00 2,600 b. LIFO Ending Inventony 200 2,400 soo s 8 B o o Average Cost 6,600 1000 400 x 6.6 640

Explanation / Answer

FIFO Cost of goods sold units rate amount Sale from beginning inventory 100 4 400 sale from 1/20 purchase 400 6 2400 sale from 7/25 purchase 100 7 700 Cost of goods sold 3500 Ending Inventory Balance in 7/25 purchases 100 7 700 Balance in 10/20 purchases 300 8 2400 Ending Inventory 3100 LIFO Method Cost of goods sold units rate amount sale from 10/20 purchase 300 8 2400 Balance in 7/25 purchases 200 7 1400 sale from 1/20 purchase 100 6 600 Cost of goods sold 4400 Ending Inventory sale from 1/20 purchase 300 6 1800 Balance in beginning inventory 100 4 400 Ending Inventory 2200 Average cost method Average cost of goods available for sale = 6,600/1,000 = 6.60 Cost of goods sold = 600*6.60 = 3,960 Ending inventory = 400*6.60 = 2,640

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