E7-4 Calculating Cost of Ending Inventory and Cost of Goods Sold under Periodic

Question

E7-4 Calculating Cost of Ending Inventory and Cost of Goods Sold under Periodic FIFO, LIFO, and Weighted Average Cost [LO 7-3] Spotter Corporation reported the following for June in its periodic inventory records. Description Units Unit Cost Total Cost Date June 1 Beginning 11 Purchase 24 Purchase 30 12 38 20 24 $ 96 342 220 Ending Required: 1. Calculate the cost of ending inventory and the cost of goods sold under the (a) FIFO, (b) LIFO, and (c) weighted average cost methods. (Do not round your intermediate calculations. Round "Weighted Average Cost" to 2 decimal places.) Cost of Ending Inventory Cost of Goods Sold FIFO LIFO Weighted Average Cost 2. Which of the three methods will lead to reporting the highest net income? FIFO LIFO Weighted Average

Explanation / Answer

Calculate following :

2) FIFO will lead to reporting highest net income

Cost of ending inventory Cost of goods sold FIFO (20*11+4*9) = 256 (658-256) = 402 LIFO (12*8+12*9) = 204 (658-204) = 454 Weighted average (658/70*24) = 225.60 (658-225.60) =432.40

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