How to calculate FIFO and LIFO. Problem 6-3A Headlands Industries had a beginnin

Question

How to calculate FIFO and LIFO.

Problem 6-3A Headlands Industries had a beginning inventory of 99 units of Product RST at a cost of $8 per unit. During the year, purchases were: Feb. 20 584 units at $9 Aug. 12 367 units at $11 May 5 550 units at $10 Dec. 8 96 units at $12 Headlands Industries uses a periodic inventory system. Sales totaled 1,460 units. Your answer is correct (a) Determine the cost of goods available for sale. The cost of goods available for sale (b) Calculate Average Cost. (Round answer to 3 decimal places, e.g. 5.125.) Average Cost 16737 9.869 SHOW LIST OF ACCOUNTS SHOW SOLUTION SHOW ANSWER LINK TO TEXT VIDEO: SIMILAR PROBLEM

Explanation / Answer

c) Calculate ending inventory and cost of goods sold :

LIFO results in the lowest inventory amount for the balance sheet.

FIFO results in the lowest cost of goods sold for the income statement

FIFO LIFO Average cost Cost of ending inventory (96*12+140*11) =2692 (99*8+137*9) = 2025 (16737/1696*236) = 2329 Cost of goods sold 14045 14712 14408

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