Question

A Company just starting a business made the following four inventory purchases in June:

June 1 120 Units Purchased Cost $390,
June 10 230 Units Purchased Cost $575,
June 15 230 Units Purchased Cost $620,
June 28 120 Units Purchased Cost $520,
A physical count of merchandise inventory on June 30 reveals that there are 260 units on hand. The inventory method which results in the highest gross profit for June is :
- the lifo method
- the weighted average unit cost method
-not determinable
the fifo method

Answer 1

answer : fifo method explanation LIFO periodic cost of goods available for sale cost of goods sold units unit price total units unit price total 120 390 46800 230 575 132250 90 575 51750 230 620 142600 230 620 142600 120 520 62400 120 520 62400 700 384050 440 256750 date june, o1 purchase june , 10 purchases june , 15 purchases june, 28 purchases total ending inventory units unit price total 120 390 46800 140 575 80500 260 127300 date june, o1 purchase june , 10 purchases june , 15 purchases ljune, 28 purchases total weighted average method cost of goods available for sale cost of goods sold ending inventory units unit price total units unit price total units unit price total 120 390 46800 1440 548.64 241403 260549142647 230 575 132250 230 620 142600 120 520 62400 average price= 384050/700= 548.63 700 384050 241403 142647 average 241403

ending inventory unit price total units date june, o1 purchase june , 10 purchases june , 15 purchases june , 28 purchases total FIFO method cost of goods available for sale cost of goods sold units unit price total units unit price total | 120 390 46800 120 390 46800 | 230 575 132250 230 575 132250 230 620 142600 90 620 55800 120 520 62400 700 384050 440 234850 140 / 620 86800 12052062400 260 149200 since the fifo method have lower cost of goods sold so this method would result in higher gross profit