Exercise 6-7 Lisa Company had 145 units in beginning inventory at a total cost o

Question

Exercise 6-7 Lisa Company had 145 units in beginning inventory at a total cost of $17,400. The company purchased 290 units at a total cost of $43,500. At the end of the yer, Lisa had 60 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 o0 decimal places, e.g. 1,250.) The cost of the ending inventory FIFO LIFO Average-cost The cost of goods sold Which cost flow method would result in the highest net income? Which cost flow method would result in inventories approximating current cost in the balance sheet? Which cost flow method would result in Lisa paying the least taxes in the first year?

Explanation / Answer

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 145 120 17400 145 120 17400 Purchasse 290 150 43500 230 150 34500 60 150 9000 TOTAL 435 60900 375 51900 60 150 9000 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 145 120 17400 85 120 10200 60 120 7200 Purchasse 290 150 43500 290 150 43500 TOTAL 435 60900 375 53700 60 120 7200 STATEMENT SHOWING INVENTORY RECORD UNDER PERIODIC WEIGHTED AVERAGE METHOD RECIEPTS COST OF GOODS SOLD BALANCE DATE UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ Balance 145 120 17400 Purchasse 290 150 43500 TOTAL 435 140 60900 375 140 52500 60 140 8400 FIFO results in highest Net income. FIFO would reesult in inventory approximating current cost in Balance sheet LIFO would result in Least taxes

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