Question

Inventory and Cost of Goods Sold 33 E6-17A. (Lear (Learning Objective 2: Compare ending inventory and cost of goods sold using four ds) Use the data for Griffin Company in E6-16A to answer the following. CO2 Requirements 1. Compute cost of goods sold and ending inventory, using each of the following methods: a. Specific identification, with seven $165 units and four $175 units still on hand at the end b. Average cost c. FIFO d. LIFO 2. Which method produces the highest cost of goods sold? Which method produces the lowest cost of goods sold? What causes the difference in cost of goods sold? Arm nur FIRO Ise the LO 2

Answer 1

1		Cost of Goods Sold	Ending Inventory
a.	Specific Identification	$2,735	$1,855
b.	Average cost	$2,720	$1,870
c.	FIFO	$2,665	$1,925
d.	LIFO	$2,773	$1,817
2	Highest COGS	Specific Identification
	Lowest COGS	FIFO
	Because of ending inventory valuation is different in a different method
	Working
	Specific Identification
		Available for Sale			Cost of Goods Sold			Ending Inventory
	Date	Activity	Units	Unit Cost	Units Sold	Unit Cost	COGS	Ending Inventory Units	Unit Cost	Ending Inventory Costs
	Dec 1	Beginning Inventory	9	$165	2	$165	$330	7	$165	$1,155
	Dec 15	Purchase	5	$166	5	$166	$830	-	$166	$0
	Dec 26	Purchase	13	$175	9	$175	$1,575	4	$175	$700
			27		16		$2,735	11		$1,855
	Weighted average
	Units	Unit Cost
	9	$165	$1,485
	5	$166	$830
	13	$175	$2,275
	27		$4,590
	Weighted average cost per unit		$170
	Ending Inventory = 11 x $170	$1,870
	COGS = Beginning inventory + purchases - ending inventory
	=	$1,485 + $3,105 - $1,870
	=	$2,720
	FIFO
	Units	Unit Cost
	11	$175.00	$1,925
		Ending Inventory	$1,925
	COGS = Beginning inventory + purchases - ending inventory
	=	$1,485 + $3,105 - $1,925
	=	$2,665
	LIFO
	Units	Unit Cost
	9	$165	$1,485
	2	$166	$332
		Ending Inventory	$1,817
	COGS = Beginning inventory + purchases - ending inventory
	=	$1,485 + $3,105 - $1,817
	=	$2,773