Question

b. How are these classifications similar or dissimilar to the inventory classifications used in a manufacturing firm? Obj. 6 ✓b. $19,080 E6-14 Inventory by three methods The units of an item available for sale during the year were as follows: Jan. 1 Inventory 27 units at $400 Feb 19 Purchase S4 units at $460 June 8 P urchase 63 units at 5520 Oct. 7 Purchase 56 units at $550 There are 45 units of the item in the physical inventory at December 31. Determine the cost of ending inventory using (a) the first-in, first-out method, (b) the last-in, first-out method, and the weighted average cost method. TE6-15 Inventory by three methods; cost of goods sold The units of an item available for sale during the year were as follows: Jan. Inventory 21 units at $1,800 May 15 Purchase 29 units at $1,950 Aug.7 Purchase 10 units at $2.040 Nov 20 Purchase 15 units at $2,100 There are 18 units of the item in the physical inventory at December 31. Determine the cost of ending Inventory and the cost of goods sold by three methods, presenting your answers in the following form: Goods Sold Inventory Method First-infurtout b. Last-in, first-out Weighted average 1 E6-16 Comparing Inventory methods Assume that a firm separately determined Inventory under FIFO and LIFO and then com pared the results. 1. In each space below, place the correct sign Bless than greater than ), or equal ( for each comparison, a ming periods of rising prices FIFO ending Inventory LIPO ending Inventory b. PIPO cost of goods sold L IFO CON of goods sold C ITO net income LIPO net income d. FIFO income tax LIFO income tax 2. Why would management prefer to use LIFO over FIFO in periods of rang prices

E6-15

Answer 1

€6-15 Answer Calculation of cost of of Ending inventory of the cogs Inventory Method Ending Inventory .' COGS a) fint in- first out 2712$ 5178 $ (Note-1) 5) Last-in - Arst out (note->) 15434 6347$ 3) Weighted Average (Note-3) 1893.64 5996.4$ Note -1 Arst in first out a Under this method, the items came first will leave first Therefore closing, inventory - Remaining Ptenes of Cast purchases. pe 15 units of 2100$ + 3 units of 6124 SPS (18 items! z 18 units of 27124" [ kovas ne za] z 18 units of 2712$ Opn9 COGS 29 Inventory + Purchases - Closing inventory z 1800$ '4 6090 $ - 27124 politica 51784 213 bilo pun Note 2 Last-in. First out of e indes this methat, the items came last are leaved first . .. Closing Inventary & Remaining tengs of aut purchase/ (18 items opening inventory z 18 untes of $ 1543 [1200 x 18] cogs > Opong inventory + purchases – cloding inventory z 1800 $ + 6090$ - $ 1543 2 63475

Note : 3) Weighted Average Method Under this method, the value of Ending inventory is Calwlated by taking Average of all inventory as Average price : 75 vnits ini 1800 + 1950 + 2040 + 2100 , a $ 7890 .2 75 Onits 24 $ 105.2 per only ! Unit - Closing to mventory < 18 units X $ 105.2 z $ 1893:6 Sie Opng Inventory + purchases - Ending inventory 2800 $ +-6040 $ - $ 1893.6 COGS 259 & z 1 z $ 59976.4 sito Important, Groing inventory is called as Closing inventory COGS - Cost of Goods Sold Opening Inventory is Ihren tong on Jan Lot pushimin? pistas - Thauliug your

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