Question

Exercise 239 Grother Company uses the periodic inventory method and had the following inventory information available: Unit Cost 1/1 1/20 7/25 10/20 Beginning Inventory Purchase Purchase Purchase Units 100 500 100 300 1,000 Total Cost $400 2,500 700 2,400 $6,000 $8 A physical count of inventory on December 31 revealed that there were 350 units on hand. Answer the following independent questions. 1. Assume that the company uses the FIFO method. The value of the ending inventory at December 31 is Assume that the company uses the average cost method. The value of the ending inventory on December 31 is Assume that the company uses the LIFO method. The value of the ending inventory on December 31 is U 4. (a) Determine the difference in the amount of income that the company would have reported if it had used the FIFO method instead of the LIFO method 4. (b) Would income have been greater or less? Click if you would like to Show Work for this question: Open Show. Work Greater Question Attempts: 0 of 1 used SAVE FOR LATER SU Lesser

Answer 1

(1) PERO method Ending inventory 300 x 8 50 x 7 350 units. - - $ 2400 $850 $2750 Ending onventory - $2750 (2) weighted Average Average cost a $6.000 $6 per unit 1000 - Endung inventou = $6 x 350 - $2100 (3) ELFO 100 x $4 250x45 - $400 - $1250 $ 1650 - Ending inventary $1650

(4) a) cast of goods sold - FPFO - $10.000-$2750 = $4250 - LIPO - 410,000-$1660 - $ 8350 Difference & $8350 - $7250 $1100 (6) Gueate