Question

Exercise 6-15A Periodic: Cost flow assumptions LO P3 Flora's Gifts reported the following current month data for its only product. The company uses a periodic inventory system, and its ending inventory consists of 92 units-66 units from the January 6 purchase and 26 units from the January 25 purchase. - Jan. 1 Beginning inventory Jan. 6 Purchase Jan. 17 Purchase Jan. 25 Purchase Totals 215 units $4.60 390 units $4.30 620 units @ $3.90 38 units $3.60 1.263 units $ 989.Be 1,677.be 2.418.ee 136.80 $5.229.80 (a-d) Determine the cost assigned to ending inventory and to cost of goods sold for the following. (Do not round Intermediate calculations and round your answers to nearest whole dollar) Ending Cost of Goods Inventory Sold 13 3 7773 4 .844 (a) Specific identification (b) Weighted average (c) FIFO (d) |LIFO (e) Which method yields the lowest net income? Weighted average LIFO Specific identification FIFO

Answer 1

Weighted average cost per unit = Cost of goods available for sale / Unit available for sale = 5220.80 / 1263

4.13

	Ending inventory	Cost of goods sold [ Cost of goods available for sale - Ending inventory ]
(a) Specific identification	377 [ (66*4.3)+(26*3.6) ]	4844 [ 5220.80 - 377 ]
(b) Weighted average	380 [ 92*4.13 ]	4841 [ 5220.80 - 380 ]
.(c) FIFO	347 [ (38*3.6)+(54*3.9) ]	4874 [ 5220.80 - 347 ]
(d) LIFO	423 [ 92*4.6 ]	4798 [ 5220.80 - 423 ]

.(e) Answer : FIFO

Explanation : As the cost of goods sold is highest in FIFO method, that method will result in lowest net income.