10.00 points Simple Plan Enterprises uses a periodic inventory system. Its recor

Question

10.00 points Simple Plan Enterprises uses a periodic inventory system. Its records showed the following: Inventory. December 31, using FIFO-. 64 Units @ $27 = $1.728 Inventory. December 31, using LIFO 64 Units @ $23-$1.472 Transactions in the Following Year Purchase, January 9 Purchase, January 20 Sale, January 11, (at $51 per unit) Sale, January 27 (at $52 per unit) Units Unit Cost Total Cost 76 $28 2,128 3,654 126 106 29 82 Required: 1. Compute the number and cost of goods available for sale, the cost of ending inventory, and the cost of goods sold under FIFO and LIFO. FIFO Number of Goods Available for Sale (Units) Cost of Goods Available for Sale Cost of Ending Inventory Cost of Goods Sold 266 266 2. Compute the inventory turnover ratio under the FIFO and LIFO inventory costing methods. (Round your answers to 2 decimal places.) FIFO IFO Inventory Turnover Ratio 2.63 3. The inventory method used does make a significant difference in the inventory turnover ratio. O Yes

Explanation / Answer

FIFO units unit total cost amount inventory,december 31 64 27 1728 purchase,january 9 76 28 2128 purchase,january 20 126 29 3654 total 266 7510 Ending inventory units = 266-(106+82) 78 units 78*29 2262 Cost of goods sold = (64*27) +(76*28)+(48*29) 5248 LIFO units unit total cost amount inventory,december 31 64 23 1472 purchase,january 9 76 28 2128 purchase,january 20 126 29 3654 total 266 7254 ending inventory units = (64*23)+(14*28) 1864 cost of goods sold = (62*28) +(126*29) 5390 1) FIFO LIFO Number of Goods Available for sale (units) 266 266 cost of goods available for sale 7510 7254 cost of ending inventory 2262 1864 cost of goods sold 5248 5390 2) inventory turnover ratio = (cost of goods sold)/average inventory average inventory = (opening+ending)/2 (1728+2262)/2 1995 5248/1995 2.63 inventory turnover ratio = (cost of goods sold)/average inventory average inventory = (opening+ending)/2 (1472+1864)/2 1668 5390/1668 3.23 FIFO LIFO inventory turnover ratio 2.63 3.23 3) Yes

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