Question

P6-5A You are provided with the following information for Najera Inc. for the month ended June 30, 2017. Najera uses the periodic method for inventory Unit Cost or Date Quantity Selling Price Description Beginning inventory Purchase Sale Sale return Purchase Purchase return Sale Purchase $40 40 135 110 June 1 June 4 June 10 June 11 June 18 June 18 June 25 June 28 70 70 46 46 75 50 65 30 Instructions (a) Calculate (i) ending inventory, (ii) cost of goods sold, (iii) gross profit, and (iv) gross profit rate under each of the following methods (1) LIFO. (2) FIFO. (3) Average-cost. (b) Compare results for the three cost flow assumptions.

can I please have explanations as well

Answer 1

a)

1.

LIFO
	Goods Purchased			Cost of Goods Sold			Inventory Balance
Date	# of units	Cost per unit	Cost of Goods Available for sale	# of units	Cost per unit	Cost of Goods Sold	# of units	Cost per unit	Inventory Balance
June 1							40	40	1600
June 4	135	44	5940				40	40	1600
							135	44	5940
June 10				110	44	4840	40	40	1600
							25	44	1100
June 11							40	40	1600
							40	44	1760
June 18	55	46	2530				40	40	1600
							40	44	1760
							55	46	2530
June 18							40	40	1600
							40	44	1760
							45	46	2070
June 25				45	46	2070	40	40	1600
				20	44	880	20	44	880
June 28	30	50	1500				40	40	1600
							20	44	880
							30	50	1500
Total						7790			3980

Sales
95 units @70	6650
65 units @75	4875	11525
Less:COGS		7790
Gross Profit		3735
Gross Profit ratio		32.41%

Ending inventory = 3980

2.

FIFO
	Goods Purchased			Cost of Goods Sold			Inventory Balance
Date	# of units	Cost per unit	Cost of Goods Available for sale	# of units	Cost per unit	Cost of Goods Sold	# of units	Cost per unit	Inventory Balance
June 1							40	40	1600
June 4	135	44	5940				40	40	1600
							135	44	5940
June 10				40	40	1600	65	44	2860
				70	44	3080
June 11							80	44	3520
June 18	55	46	2530				80	44	3520
							55	46	2530
							80	44	3520
June 18							45	46	2070
June 25				65	44	2860	15	44	660
							45	46	2070
June 28	30	50	1500				15	44	660
							45	46	2070
							30	50	1500
Total						7540			4230

Sales
95 units @70	6650
65 units @75	4875	11525
Less:COGS		7540
Gross Profit		3985
Gross Profit ratio		34.58%