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	500
17	Purchase	200	$5.10
25	Sale	150
28	Purchase	100	$5.90
May 5	Purchase	250	$5.10
18	Sale	300
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:
   1. FIFO periodic

      	Cost of Goods Sold	Ending Inventory
      April	$	$
      May	$	$

   2. FIFO perpetual

      	Cost of Goods Sold	Ending Inventory
      April	$	$
      May	$	$

   3. LIFO periodic

      	Cost of Goods Sold	Ending Inventory
      April	$	$
      May	$	$

   4. LIFO perpetual (Round your intermediate calculations to the nearest cent.)

      	Cost of Goods Sold	Ending Inventory
      April	$	$
      May	$	$

   5. Weighted average (Round unit costs to 4 decimal places and final answer to the nearest dollar.)

      	Cost of Goods Sold	Ending Inventory
      April	$	$
      May	$	$

   6. Moving average (Round unit costs to 2 decimal places. Round your final answers to nearest dollar.)

      	Cost of Goods Sold	Ending Inventory
      April	$	$
      May	$	$

1. Reconcile the difference between the LIFO periodic and the LIFO perpetual results. If an amount is zero, enter "0".

   April	Cost of Goods Sold	Ending Inventory
   Difference	$	$
   May	Cost of Goods Sold	Ending Inventory
   Difference	$	$

Answer 1

Solution of the above problem is as under:

a) FIFO Periodic

Calculation of Cost of Goods Sold and Cost of Ending Inventory using Periodic Inventory Method
Date	Particulars	Quantity (In Units)	Unit Cost ($)	Value ($)	Quantity Balance	Value Balance
Apr-01	Beginning Inventory	500	5	2500	500 units @ $5	2500
Apr-17	Purchase	200	5.10	1020	500 units @ $5 200 units @ $5.10	3520
Apr-28	Purchase	100	5.90	590	500 units @ $5 200 units @ $5.10 100 units @ $5.90	4110
	Total Units and Cost	800		4110
Note: Total Units Sold during the Month of April is: 150 Units. Therefore Ending Inventory is: (800-150) Units= 650 Units
This implies, Opening Inventory as on May 1 is 650 Units
a) Calculation of Cost of Ending Inventory and Cost of Goods Sold under FIFO Method
Cost of Ending Inventory (650 Units) is:	350 units @ $5 200 units @ $5.10 100 units @ $5.90	3360
Cost of Goods Sold (150 Units)	150 units @ $5	750

Calculation of Cost of Goods Sold and Cost of Ending Inventory using Periodic Inventory Method
Date	Particulars	Quantity (In Units)	Unit Cost ($)	Value ($)	Quantity Balance	Value Balance
May-01	Beginning Inventory	350 200 100	5 5.10 5.90	3360	350 units @ $5 200 units @ $5.10 100 units @ $5.90	3360
May-05	Purchase	250	5.10	1275	350 units @ $5 450 units @ $5.10 100 units @ $5.90	4635
	Total Units and Cost	900		4635
Note: Total Units Sold during the Month of May is: 350 Units. Therefore Ending Inventory is: (900-350) Units= 550 Units
a) Calculation of Cost of Ending Inventory and Cost of Goods Sold under FIFO Method
Cost of Ending Inventory (550 Units) is:	450 units @ $5.10 100 units @ $5.90	2885
Cost of Goods Sold (350 Units)	350 units @ $5	1750

b) FIFO Perpetual

Calculation of Cost of Goods Sold and Cost of Ending Inventory using FIFO Perpetual Inventory Method
Date	Particulars	Quantity (In Units)	Unit Cost ($)	Value ($)	Quantity Balance	Value Balance
Apr-01	Beginning Inventory	500	5.00	2500	500 units @ $5	2500
Apr-17	Purchase	200	5.10	1020	500 units @ $5 200 units @ $5.10	3520
Apr-25	Sale	-150	150 units @ $5	-750	350 units @ $5 200 units @ $5.10	2770
Apr-28	Purchase	100	5.90	590	350 units @ $5 200 units @ $5.10 100 units @ $5.90	3360
	Total Units and Cost	650		3360
Therefore,
Cost of Goods Sold (150 Units)= $ 750
Cost of Ending Inventory (650 Units) = $ 3360

Calculation of Cost of Goods Sold and Cost of Ending Inventory using FIFO Perpetual Inventory Method
Date	Particulars	Quantity (In Units)	Unit Cost ($)	Value ($)	Quantity Balance	Value Balance
May-01	Beginning Inventory	350 200 100	5 5.10 5.90	3360	350 units @ $5 200 units @ $5.10 100 units @ $5.90	3360
May-05	Purchase	250	5.10	1275	350 units @ $5 450 units @ $5.10 100 units @ $5.90	4635
May-18	Sale	-300	300 units @ $5	-1500	50 units @ $5 450 units @ $5.10 100 units @ $5.90	3135
May-22	Sale	-50	50 units @ $5	-250	450 units @ $5.10 100 units @ $5.90	2885
	Total Units and Cost	550		2885
Therefore,
Cost of Goods Sold (350 Units)= $ (1500+250)= $1750
Cost of Ending Inventory (550 Units) = $ 2885

c) LIFO Periodic

Calculation of Cost of Goods Sold and Cost of Ending Inventory using Periodic Inventory Method
Date	Particulars	Quantity (In Units)	Unit Cost ($)	Value ($)	Quantity Balance	Value Balance
Apr-01	Beginning Inventory	500	2	1000	500 units @ $2	1000
Apr-17	Purchase	200	5.10	1020	500 units @ $2 200 units @ $5.10	2020
Apr-28	Purchase	100	5.90	590	500 units @ $2 200 units @ $5.10 100 units @ $5.90	2610
	Total Units and Cost	800		2610
Note: Total Units Sold during the Month of April is: 150 Units. Therefore Ending Inventory is: (800-150) Units= 650 Units
This implies, Opening Inventory as on May 1 is 650 Units
b) Calculation of Cost of Ending Inventory and Cost of Goods Sold under LIFO Method
Cost of Ending Inventory (650 Units) is:	500 units @ $2 150 units @ $5.10	1765
Cost of Goods Sold (150 Units)	50 units @ $5.10 100 units @ $5.90	845

Calculation of Cost of Goods Sold and Cost of Ending Inventory using Periodic Inventory Method
Date	Particulars	Quantity (In Units)	Unit Cost ($)	Value ($)	Quantity Balance	Value Balance
May-01	Beginning Inventory	500 150	2 5.10	1765	500 units @ $2 150 units @ $5.10	1765
May-05	Purchase	250	5.10	1275	500 units @ $2 400 units @ $5.10	3040
	Total Units and Cost	900		3040
Note: Total Units Sold during the Month of May is: 350 Units. Therefore Ending Inventory is: (900-350) Units= 550 Units
b) Calculation of Cost of Ending Inventory and Cost of Goods Sold under LIFO Method
Cost of Ending Inventory (550 Units) is:	500 units @ $2 50 units @ $5.10	1255
Cost of Goods Sold (350 Units)	350 units @ $5.10	1785