Question

Alternative Inventory Methods Garrett Company has the following transactions during the months of April and May: Date Transaction Units Cost/Unit April 1 Balance 17 Purchase $5.10 25 Sale 500 200 150 100 250 300 28 Purchase 5.90 5.10 May 5 Purchase 18 Sale 22 Sale 50 The cost of the inventory on April 1 is $5, $4, and $2 per unit, respectively, under the FIFO, average, and LIFO cost flow assumptions. Required: 1. Compute the costs of goods sold for each month and the inventories at the end of each month for the following alternatives: a. FIFO periodic Cost of Goods Sold Ending Inventory 750 X April $ May $ $ C $

Answer 1

Answer to 1 (a) Under FIFO Method Periodic Cost of goods sold Ending inventory 750 $ 1,650 $ April May 3,360 | $ 2,885 Answer to 1 (b) Under FIFO Me thod Perpetual Cost of goods sold Ending inventory $ $ 750 $ 1,650 $ April May 3,360 2,885 Working- Inventory record under FIFO method Cost of goods sold Unit cost Total Cost Qty Purchases Inventory in hand Unit cost Total Cost 500 Unit cost Date Total Cost Qty Qty 2500 Apr-01 5 500 1020 2500 200 Apr-17 5.1 5 1020 1750 1020 1750 1020 200 350 200 5.1 Apr-25 150 750 5 5.1 350 200 5 590 Apr-28 100 5.9 5.1 100 5.9 590 650 Total 3360 May-05 350 1750 1020 590 250 5.1 1275 5 200 100 5.1 5.9 1275 250 5.1 1500 250 Мay-18 50 300 5 5 1020 590 1275 1020 200 5.1 100 5.9 250 5.1 50l 150 200 May-22 5 5.1 100 590 5.9 250 550 1275 2885 5.1 Total 2885 2400 Answer to 1 (c) Under LIFO Method Periodic Cost of goods sold Ending inventory 765 $ 1,865 $ April May $ 1,845 1,255 Answer to 1 (d) Under LIFO Method Perpetual Cost of goods sold Ending inventory 765$ April May 1,845 $ 1,865 $ 1,255 Working- Inventory record under LIFO method Purchases Cost of goods sold Unit cost Total Cost Qty Inventory in hand Unit cost Total Cost Date Qty Total Cost Qty Unit cost 1000 Apr-01 500 2. 500 200 500 1020 1000 200 Apr-17 5.1 2 1020 1000 5.1 150 Apr-25 5.1 765 50 5. 255 500 1000 590 Apr-28 100 5.9 50 5.1 255 100 590 1845 5.9 Total 650 500 1000 May-05 250 5.1 1275 2 50 5.1 255 590 100 5.9 1275 250 5.1 500 1000 250 Мay-18 5.1 1275 2 50 50 5.9 295 5.1 255 50 5.9 590 1000 50 500 May-22 5.9 295 2 50 5.1 255 Total 1255 2885 2630 550 Answer to 1 (e) Under Weighted Average Method Cost of goods sold Ending inventory 676.8750 $ 1,899.7222 $ April May 2,933.1250 $ 2,985.2778 Calculation of Inventory under Weighted Average' Particulars Balance on Apr-1 Purchases on Apr 17 Total Cost No. of units Cost p.u 2,000 500 4 200 S 1,020 Purchases on Apr 28 Total goods available for Sale Less: Inventory at Apr 30 Cost of goods sold 6 S 4.5125 $ 100 $ 590 800 3,610 4.5125 $2,933.12 50 650 $ 150 $ 4.5125 676.8750 Balance on may 1 Purcahses on may 5 Total goods available for Sale Less: Inventory at May 31 Cost of goods sold 3610 650 4.5125 250 5.1 1275 900 5.4278 4885 2985.2778 5.4278 550 350 5.4278 1899.7222 Answer to 1 (f) Under Moving Average method Cost of goods sold Ending inventory April May 647.1450 2,962.8650 1,648.0470 $ 2,589.8060 Working- Inventory record under moving average Purchases Cost of goods sold Unit cost Total Cost Qty Inventory in hand Total Cost Unit cost Total Cost Qty Unit cost Date Qty 2000 Apr-01 500 4. 2000 500 Apr-17 41 200 5.1 1020 1020 200 5.1 700 4.314286 3020 4.3143 2372.865 0 4.3143 647.1450 Apr-25 150 550 4.3143 2372.865 590 550 100 Apr-28 100 5.9 590 5.9 Total 650 4.558254 2962.865 650 4.558254 2962.865 250 May-05 5.1 1275 250 900 4.708739 4237.865 5.1 1275 Мay-18 300 4.7087 600 4.708739 2825.243 1412.61 50 4.708739 550 4.708739 2589.806 May-22 235.437 550 2589,806 Total 2885 2295.192 Answer-2 Difference between LIFO perio d ic & LIFO Perpetual April Cost of goods sold Ending inventory Difference 0 0 Cost of goods sold May Ending inventory Difference 0 0