Question

Inventory information for Part 311 of Novak Corp. discloses the following information for the month of June. June 1 11 20 Balance Purchased Purchased 297 units @ $17 795 units @ $21 500 units @ $23 June 10 15 27 Sold Sold Sold 203 units @ $42 498 units @ $44 303 units @ $47 Assuming that the periodic inventory method is used, compute the cost of goods sold and ending inventory under (1) LIFO and (2) FIFO. (1) LIFO (2) FIFO Cost of Goods Sold $ Ending Inventory $ Assuming that the perpetual inventory method is used and costs are computed at the time of each withdrawal, what is the value of the ending inventory at LIFO? The ending inventory at LIFO $ e Textbook and Media Assuming that the perpetual inventory method is used and costs are computed at the time of each withdrawal, what is the gross profit if the inventory is valued at FIFO? Gross Profit (FIFO) $

Answer 1

Correct Answer:

Requirement A)

Periodic	FIFO	LIFO
Cost of Goods Sold	$                  19,896	$         22,084.00
Ending Inventory	$                  13,348	$         11,160.00

Working:

Cost of Goods Available for sale
	Units	Cost per unit	value
Beginning Inventory	297	$                       17.0	$                     5,049.0
Purchases	795	$                       21.0	$                   16,695.0
Purchases	500	$                       23.0	$                 11,500.00
Total	1592		$                       33,244

	FIFO
A	Total Units Available for sale			1592		$               33,244
	Units Sold			1004
	Ending Inventory Units			588
	Valuation
	Cost of Goods Sold		297		$                         17.00	$            5,049.00
			707		$                         21.00	$               14,847
B	Cost of Goods Sold		1004	units		$               19,896
A-B	Ending Inventory		588	units		$            13,348.0

	LIFO
A	Total Units Available for sale			1592		$               33,244
	Units Sold			1004
	Ending Inventory Units			588
	Valuation
	Cost of Goods Sold		500		23	11,500.00
			504		21	10,584.00
B	Cost of Goods Sold		1004	units		$         22,084.00
A-B	Ending Inventory		588	units		$         11,160.00

Requirement B)

Perpetual	LIFO
Ending Inventory	$                  12,366

Working:

	LIFO
A	Total Units Available for sale			1592		$               33,244
	Units Sold			1004
	Ending Inventory Units			588
	Valuation
	Cost of Goods Sold		203		$                         17.00	3,451.00
			498		$                         21.00	10,458.00
			303		$                         23.00	6,969.00
B	Cost of Goods Sold		1004	units		$         20,878.00
A-B	Ending Inventory		588	units		$         12,366.00

Requirement C)

Perpetual		FIFO
	Gross profit	$                   24,783.00

Working:

		FIFO
A	Sales Revenue	$                   44,679.00
B	Cost of goods sold	$                   19,896.00
A-B	Gross profit	$                   24,783.00

Note: Cost of goods sold in FIFO remains same in Periodic inventory and perpetual inventory system.

End of answer.

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