Question

1. Alternative Inventory Methods

   Park Company's perpetual inventory records indicate the following transactions in the month of June:

   	Units	Cost/Unit
   Inventory, June 1	200	$3.20
   Purchases:
   June 3	200	3.50
   June 17	250	3.60
   June 24	300	3.65
   Sales:
   June 6	300
   June 21	200
   June 27	150

   Required:

   1.	Compute the cost of goods sold for June and the inventory at the end of June using each of the following cost flow assumptions: If required, round your answers to the nearest dollar.

   1. FIFO

      Cost of Goods Sold	$
      Ending Inventory	$

   2. LIFO (Round your intermediate calculations and final answers to the nearest cent.)

      Cost of Goods Sold	$
      Ending Inventory	$

   3. Average cost (In your computations, round new per unit costs to the nearest cent. Round your intermediate computations and final answers to the nearest dollar.)

      Cost of Goods Sold	$
      Ending Inventory	$

Answer 1

1. FIFO

   Cost of Goods Sold	$1095
   Ending Inventory	$2240

2. LIFO (Round your intermediate calculations and final answers to the nearest cent.)

   Cost of Goods Sold	$1047.50
   Ending Inventory	$2287.50

3. Average cost (In your computations, round new per unit costs to the nearest cent. Round your intermediate computations and final answers to the nearest dollar.)

   Cost of Goods Sold	$1083
   Ending Inventory	$2252

Explanations :-

FIFO :-

Total units available for sale = Beginning inventory + Purchase

= 200 + 200 + 250 + 300 = 950 units

Cost of Goods available for sale = (200 * $3.20) + (200 * $3.5) + (250 * $3.6) + (300 * 3.65) = $3335

Ending Inventory consists 300 units purchased as on June 24

= 300 units * $3.65 = $1095

Cost of goods sold = Cost of Goods available for sale - Ending Inventory

= $3335 - $1095 = $2240

LIFO :-

Ending Inventory consists 100 units from Beginning Inventory, 50 units from June 17 & 150 units from June 24

= (100 * $3.20) + (50 * $3.60) + (150 * $3.65) = $1047.50

Cost of goods sold = Cost of Goods available for sale - Ending Inventory

= $3335 - $1047.50 = $2287.50

Average :-

(200 * $3.20) + (200 * $3.50)/400 = $3.35

Units sold = 300 units

Remaining = 100 units @ $3.35

Purchase June 17 = (250 * $3.60) + (100 * $3.35)/350 = $3.53

Sale June 21 = 200 units

Remaining units = 150 units @ $3.53

Purchase June 24 = (300 * $3.65) + (150 * $3.53)/450 = $3.61

Sale June 27 = 150 units

Ending Inventory = 300 units * $3.61 = $1083

Cost of goods sold = $3335 - $1083 = $2252