Question

E8.11 (LO 3) (FIFO, LIFO and Average-Cost Determination) transactions for the month of April was as follows. John Adams Company's record of Purchases Sales April 1 (balance on hand) April 3 600 @ $6.00 1,500 @ 500 @ $10.00 1,400 10.00 600 11.00 1,200 11.00 900 12.00 4 6,08 9 800@ 6.40 11 1,200 @ 6.50 700 @ 6.60 13 23 21 27 29 500 @ 6.79 4,600 5,300 Instructions a. Assuming that periodic inventory records are kept in units only, compute the inventory at April 30 using (1) LIFO and (2) average-cost. b. Assuming that perpetual inventory records are kept in dollars, determine the inventory using (1) FIFO and (2) LIFO

Answer 1

Inventory valuation under periodic and perpetual inventory method.

6.4 6.5 6.6 Inventory Purchase Perticulars Units Price Cost Opening 600 3600 Purchase 1500 6.08 9120 Purchase 800 5120 Purchase 1200 7800 Purchase 700 4620 Purchase 500 6.79 3395 Total 53000 33655 Periodic Method a-2 Average method Average cost = ( 33655 / 5300 ) = 6.35 Closing inventory = 700 * 6.35 = $4445 a-1 LIFO Method Closing inventory = ( 600 * 6 ) + ( 100 * 6.06 ) = $4206 Perpetual Method b-1 FIFO method Closing inventory = ( 500 * 6.79 ) + ( 200 * 6.6 ) = $ 4715 b-2 LIFO Method Closing inventory = ( 500 * 6.79 ) + ( 100 * 6 ) + ( 100 * 6.08 ) = $ 4603