Question

Nash Company's record of transactions for the month of April was as follows. Purchases Sales 360 S6.00 April 3 300@ $10.00 9 840 10.00 11 360 11.00 23 720 11.00 April 1 (balance on hand 900 6.08 4 8 480e 6.40 720 650 420 6.60 13 27 540@ 12.00 21 300 6.79 2.760 29 3.180 Assuming that periodic inventory records are kept in units only, calculate the average-cost per unit. (Round answer to 2 decimal places, es. 2.76 Average-cost per unit per unit Assuming that periodic inventory records are kept in units only, compute the inventory at April 30 using LIFO and average-cost. (Round answer to 0 decimal places, es. 2.760.) LIFO Average-cost s Assuming that perpetual inventory records are kept in dollars determine the inventory using (1) FIFO and (2) LIFO. (Round answer to 0 decimal places, eg. 2,760.) (1) (2) FIFO LIFO Inventory Compute cost of goods sold assuming periodic inventory procedures and inventory priced at FIFO. (Round answer to 0 decimal places, es. 2.760) Cost of goods sold In an inflationary period, which inventory method-FIFO LIFO, average-cost-will show the highest net income? inventory method will show the highest neti

Answer 1

Average cost per unit:

Units	Cost/unit	Total
360	$6.00	$2,160.00
900	$6.08	$5,472.00
480	$6.40	$3,072.00
720	$6.50	$4,680.00
420	$6.60	$2,772.00
300	$6.79	$2,037.00
3180		$20,193.00

Average cost per units = Total costs ÷ Total units = 20,193/3,180 = $6.35

Ending inventory (Periodic):

Ending inventory
LIFO	$2,525
Average-cost	$2,667

Calculation:

LIFO	Units	Cost/unit	Total
Apr 1	360	$6.00	$2,160
Apr 4	60	$6.08	$365
	420		$2,525
Average	Units	Cost/unit	Total
	420	$6.35	$2,667

Ending inventory (Perpetual):

		FIFO	LIFO
Ending inventory		$2,829	$2,762

Calculation:

FIFO	Units	Cost/unit	Total
Apr 21	120	$6.60	$792
Apr 29	300	$6.79	$2,037
	420		$2,829
LIFO	Units	Cost/unit	Total
Apr 1	60	$6.00	$360
Apr 4	60	$6.08	$365
Apr 29	300	$6.79	$2,037
	420		$2,762

Cost of goods sold (Periodic):

Cost of goods sold

$17,364

Calculation:

Cost of goods sold
Units	Cost/unit	Total
360	$6.00	$2,160
900	$6.08	$5,472
480	$6.40	$3,072
720	$6.50	$4,680
300	$6.60	$1,980
2760		$17,364

FIFO inventory method will show highest net income in an inflationary period because first purchases (having lower costs) are first out. So that cost of goods sold is lower and automatically net income will be higher.