Question

Penn Company uses a periodic Inventory system. At the end of the annual accounting period, December 31 of the current year, the accounting records provided the following information Units 3200 Unit Cost $ 11 00 Inventory December 31. prior year For the current year Purchase March 21 Purchase August 1 Inventory, December 31, current 5 200 4,200 7,600 12.00 4.00 Required: Compute ending inventory and cost of goods sold for the current year under FIFO, LIFO, and average cost inventory costing methods. Do not round "Average cost per unit and round dollar amount.) FIFO LIFO Average Cost Ending wiventory Cost of goods sold I

Answer 1

Answer:

	FIFO	LIFO	Average Cost
Ending inventory	$57,600	$88,000	$70,635
Cost of goods sold	$68,800	$38,400	$55,765

Calculations:

Cost of goods sold	Units
Beginning inventory	3,200
Purchases March 21	6,200
Purchases August 1	4,200
Less: Ending inventory	-7,600
Cost of goods sold	6,000

i.FIFO:

Cost of goods sold
	Units	Unit cost	Total cost
Beginning inventory	3,200	$11.00	$35,200
Purchases March 21	2,800	$12.00	$33,600
Cost of goods sold	6,000		$68,800
Ending inventory
	Units	Unit cost	Total cost
Purchases March 21	3,400	$12.00	$40,800
Purchases August 1	4,200	$4.00	$16,800
Ending inventory	7,600		$57,600

ii. LIFO

Cost of goods sold
	Units	Unit cost	Total cost
Purchases August 1	4,200	$4.00	$16,800
Purchases March 21	1,800	$12.00	$21,600
Cost of goods sold	6,000		$38,400
Ending inventory
	Units	Unit cost	Total cost
Purchases March 21	4,400	$12.00	$52,800
Beginning inventory	3,200	$11.00	$35,200
Ending inventory	7,600		$88,000

iii. Average cost:

	Units	Unit cost	Total cost
Beginning inventory	3,200	$11.00	$35,200
Purchases March 21	6,200	$12.00	$74,400
Purchases August 1	4,200	$4.00	$16,800
Total	13,600		$126,400

Average units cost = 126,400/13,600 = $9.29411764705882

Cost of goods sold = 6,000 units x $9.29411764705882 = $55,765

Ending inventory = 7,600 x $9.29411764705882 = $70,635