P6-7A sheet and al the mg on Company had a beginning inventory on January I of 1

Question

P6-7A

sheet and al the mg on Company had a beginning inventory on January I of 160 units of Product at a cost of $20 per unit. During the year, the following purchases were made. cosr and ending inu P6-7A Sekh 15 Sept. 4 330 units at $26 Dec. 2 100 units at $29 FIFO, LIFO, and with analysis, (LO 5) Mar 15 400 units at $23 July 20 250 units at $24 1,000 units were sold. Sekhon Company uses a periodic inventory system. Instructions (a) Determine the cost of goods available for sale. (b) Determine (1) the ending inventory, and (2) the cost of goods sold under each of the hi 2) Cost af assumed cost flow methods (FIFO, LIFo, and average-cost). (o) Which cost flow method results in (1) the highest inventory amount for the balance Average $4 sheet, and (2) the highest cost of goods sold for the income statement? Thr manarrCL of Inc, is reevaluating the appropriateness of using its

Explanation / Answer

(a). Cost of goods available for sale = $29880

Explanation;

Units

Cost per unit

Total

Beginning inventory

160

$20

$3200

Purchases;

March 15

400

$23

$9200

July 20

250

$24

$6000

Sep. 4

330

$26

$8580

Dec. 2

100

$29

$2900

Total purchases

1080

$26680

Cost of Goods available for sale

1240

$29880

(b).

Cost of goods sold as per FIFO (Periodic) = $23340

Ending inventory as per FIFO (Periodic) = $6540

Explanation;

FIFO (Periodic)

Units

Cost per unit

Total

Beginning inventory

160

$20

$3200

Purchases;

March 15

400

$23

$9200

July 20

250

$24

$6000

Sep. 4

330

$26

$8580

Dec. 2

100

$29

$2900

Total purchases

1080

$26680

Cost of Goods available for sale

1240

$29880

Cost of goods sold;

Units from beginning inventory

160

$20

$3200

Units from March 15 purchases

400

$23

$9200

Units from July.20 purchases

250

$24

$6000

Units from Sep. 4 purchases

190

$26

$4940

Total cost of goods sold

1000

$23340

Ending inventory ($29880 – $23340)

240

$6540

Cost of goods sold as per LIFO (Periodic) = $24840

Ending inventory as per LIFO (Periodic) = $5040

Explanation;

LIFO (Periodic)

Units

Cost per unit

Total

Beginning inventory

160

$20

$3200

Purchases;

March 15

400

$23

$9200

July 20

250

$24

$6000

Sep. 4

330

$26

$8580

Dec. 2

100

$29

$2900

Total purchases

1080

$26680

Cost of Goods available for sale

1240

$29880

Cost of goods sold;

Units from Dec.2 purchases

100

$29

$2900

Units from Sep.4 purchases

330

$26

$8580

Units from July.20 purchases

250

$24

$6000

Units from March 15 purchases

320

$23

$7360

Total cost of goods sold

1000

$24840

Ending inventory ($29880 – $24840)

240

$5040

Cost of goods sold as per Average (Periodic) = $24097

Ending inventory as per Average (Periodic) = $5783

Explanation;

Average (Periodic)

Units

Cost per unit

Total

Beginning inventory

160

$20

$3200

Purchases;

March 15

400

$23

$9200

July 20

250

$24

$6000

Sep. 4

330

$26

$8580

Dec. 2

100

$29

$2900

Total purchases

1080

$26680

Cost of Goods available for sale

1240

$24.10

$29880

Cost of goods sold

1000

$24.10

$24097

Ending inventory ($29880 – $24097)

290

$24.10

$5783

(C).

(1).

Answer is FIFO (First-in, First-out)

Explanation;

As per calculation, under FIFO method we see that value of ending inventory is highest in compare to other method.

(2).

Answer is LIFO (Last-in, First-out)

Explanation;

As per calculation under LIFO, method we see that cost of goods sold is highest in compare to other method.

Units

Cost per unit

Total

Beginning inventory

160

$20

$3200

Purchases;

March 15

400

$23

$9200

July 20

250

$24

$6000

Sep. 4

330

$26

$8580

Dec. 2

100

$29

$2900

Total purchases

1080

$26680

Cost of Goods available for sale

1240

$29880

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.