Question

Splish Brothers Inc. had a beginning inventory of 135 units of Product RST at a cost of $7 per unit. During the year, purchases were: Feb.20 650 units at $8 May 5 500 units at $9 Aug, 12 420 units at $10 Dec.8 135 units at $11 Splish Brothers uses a periodic inventory system. Sales totaled 1,520 units. Determine the cost of goods available for sale. The cost of goods available for sale $ 16330 Calculate Average Cost. (Round answer to 3 decimal places, e.g. 5.125.) Average cost $ eTextbook and Media List of Accounts Determine the ending inventory and the cost of goods sold under each of the assumed cost flow methods (FIFO, LIFO and average cost). (Round answers to decimal places, e.g. 150.) FIFO AVERAGE-COST The ending inwentary S

Answer 1

	Units	Unit cost	Total cost
Beginning inventory	135	7	945
Feb 20	650	8	5200
May 5	500	9	4500
Aug 12	420	10	4200
Dec 8	135	11	1485
Total	1840		16330
Ending inventory units	320	=1840-1520
1
The cost of goods available for sale	16330
2
Average cost	8.875	=16330/1840
3
FIFO:
The ending inventory	3335	=(135*11)+(320-135)*10
The cost of goods sold	12995	=16330-3335
LIFO:
The ending inventory	2425	=(135*7)+(320-135)*8
The cost of goods sold	13905	=16330-2425
Average cost:
The ending inventory	2840	=320*8.875
The cost of goods sold	13490	=16330-2840

4

LIFO results in lowest inventory amount for balance sheet

FIFO results in the lowest cost of goods sold for the income statement