Question

Nicole Corporation uses the periodic inventory system and the following information about their laptop computers is...

Nicole Corporation uses the periodic inventory system and the following information about their laptop computers is available:

Date                   Transaction                      Number of Units     Cost per unit

1/1                      Beginning Inventory       200                                  $30

5/5                      Purchase                          800                                  $32

8/10                   Purchase                          1,200                               $35

10/15                 Purchase                          800                                  $36

During the year 2018, 2,400 laptop computers were sold.

  1. What was ending inventory under the LIFO cost flow assumption
  2. What was cost of goods sold under the FIFO cost flow assumption
  3. What was ending inventory under the weighted average cost flow assumption?
  4. Which of the above cost flow assumptions could generate the lowest pretax-income for Nicole in 2018?
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Answer #1

To calculate cost of goods sold and ending inventory there are some assumptions followed

  • LIFO (last in first out)
  • FIFO(first in first out)
  • Weighted average cost

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