2. Compute cost of goods sold and pretax income for 2012 under the FIFO and LIFO

Question

2. Compute cost of goods sold and pretax income for 2012 under the FIFO and LIFO accounting methods. Assume that a company's beginning inventory and purchases for 2012 included: Beginning inventory Purchases January Purchases May 10 units @ $6 each 5 units@ $10 each 5 units@ $12 each units ndinj During 2012, 15 units were sold for $20 each) and other operating expenses totaled $10o. FIFO: CGS (10 x 6)+(5 x 10)110/ Cost of ending inventory 5x 12 60 Revenue 300 [15 x 20)-110 CGS-100 90 LIFO: CGs-(5x12) +(5x10) + (5x6) 140/Cost of ending inventory =5x6:30 Revenue -300 [15 x 20] 140 CGS-100 60 Mag Unts Sold mou Unts Sold ACompute cost of goods sold and pretax income for 2013 under the FIFO and LIFO accounting methods. Using the 2012 ending inventory amount from the previous problem for the 2013 beginning inventory amount. Assume that a company's purchases for 2013 included: Purchases March 6units @ $13 each Purchases November 5 units @ $14 each During 2013, 10 units were sold for $24 each, and other operating expenses totaled SZ0. March 6-S FIFO: CGS (5 x 12)15x 13)- 125/Cost of ending inventory (1 x13)+(5 x 14)-83 Revenue-240 [ 10 x 240-225 CG3-70-45 LIFO: CGS(5 x 14)+ (5x13) - 135/Cost of ending inventory (x13)+(5x 6) 43 Revenue-240 [ 10 x 24] Units Sold WoU Unls Sold 135 CGS-70-35

Explanation / Answer

Q2. STATEMENT SHOWING INVENTORY RECORD UNDER PERIODIC FIFO METHOD RECIEPTS COST OF GOODS SOLD BALANCE DATE UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ Balance Oct1 10 6 60 10 6 60 Purchasse jan 5 10 50 5 10 50 May 5 12 60 5 12 60 TOTAL 20 170 15 110 5 60 STATEMENT SHOWING INVENTORY RECORD UNDER PERIODIC LIFO METHOD RECIEPTS COST OF GOODS SOLD BALANCE DATE UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ Balance Oct1 10 6 60 5 5 30 5 6 30 Purchasse jan 5 10 50 5 10 50 May 5 12 60 5 12 60 TOTAL 20 170 15 140 5 30 FIFO LIFO COGS 110 140 ENDING INVENTORY 60 30 Sales 300 300 Less: COGS 110 140 Gross profit 190 160 Less: operating expense 100 100 net Income 90 60 Q3. STATEMENT SHOWING INVENTORY RECORD UNDER PERIODIC FIFO METHOD RECIEPTS COST OF GOODS SOLD BALANCE DATE UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ Balance Oct1 5 12 60 5 12 60 Purchasse march 6 13 78 5 13 65 1 13 13 November 5 14 70 5 14 70 TOTAL 16 208 10 125 6 83 STATEMENT SHOWING INVENTORY RECORD UNDER PERIODIC LIFO METHOD RECIEPTS COST OF GOODS SOLD BALANCE DATE UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ Balance Oct1 5 12 60 5 12 60 Purchasse march 6 13 78 5 13 65 1 13 13 November 5 14 70 5 14 70 TOTAL 16 208 135 73 FIFO LIFO COGS 125 135 ENDING INVENTORY 83 73 Sales 240 240 Less: COGS 125 135 Gross profit 115 105 Less: operating expense 70 70 net Income 45 35

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