Question

Question: 2 Casper Inc. buys and sells a household cleaning item for the last 8 years at their New Jersey outlet The following information is for Casper Inc. for the month ended June 30 2018. Casper Inc. uses the periodic method for inventory. Date Description Quantity Unit Cost or Selling Price June 1 Opening Inventory 80 80 June 3 Purchase 270 86 June 5 Sale 220 140 June 9 Sale 15 25 June 11 Sales Return 30 140 June 13 Purchase 110 92 June 15 Purchase Return 20 92 June 17 Sale 130 152 June 19 Purchase 70 100 Required: a. Calculate (1) Ending Inventory (i) Cost of Goods sold, CH) Gross Profit Under each of the following methods. LIFO. (2) FIFO, (3) Average-cost. b. From your calculations, analyze which method results in 1. The highest ending inventory, and 2. The highest cost of goods sold.

Answer 1

Question 2

Part 1

LIFO Method

Date	Particulars	Receipt	Issued	Closing
Rate	Qty	Amount	Rate	Qty	Amount	Rate	Qty	Amount
June 1	Opening							80	80	6400
June 3	Purchase	86	270	23220				80	80	6400
								86	270	23220
June 5	Sale				140	220	30800	80	80	6400
								86	50	4300
June 9	Sale				25	15	375	80	80	6400
								86	35	3010
June 11	Sale Return	140	30	4200				80	80	6400
								86	65	5590
June 13	Purchase	92	110	10120				80	80	6400
								86	65	5590
								92	110	10120
June 15	Purchase Return				92	20	1840	80	80	6400
								86	65	5590
								92	90	8280
June 17	Sales				152	130	19760	80	80	6400
								86	25	2150
June 19	Purchase	100	70	7000				80	80	6400
								86	25	2150
								100	70	7000
June 30	Closing Inventory								175	15550

COGS= (220*86)+(15*86)+(90*92)+(40*86)=18920+1290+8280+3440=31930

Gross Proifit= Sales-COGS=(30800+375+19760)-31930=19005

FIFO Method

Date	Particulars	Receipt	Issued	Closing
Rate	Qty	Amount	Rate	Qty	Amount	Rate	Qty	Amount
June 1	Opening							80	80	6400
June 3	Purchase	86	270	23220				80	80	6400
								86	270	23220
June 5	Sale				140	220	30800	86	130	11180
June 9	Sale				25	15	375	86	115	9890
June 11	Sale Return	140	30	4200				86	145	12470
June 13	Purchase	92	110	10120				86	145	12470
								92	110	10120
June 15	Purchase Return				92	20	1840	86	145	12470
								92	90	8280
June 17	Sales				152	130	19760	86	15	1290
								92	90	8280
June 19	Purchase	100	70	7000				86	15	1290
								92	90	8280
								100	70	7000
June 30	Closing Inventory								175	16570

COGS= (80*80)+(140*86)+(15*86)+(130*86)=6400+12040+1290+11180=30910

Gross Proifit= Sales-COGS=(30800+375+19760)-30910=20025

Average Method

Date	Particulars	Receipt	Issued	Closing
Rate	Qty	Amount	Rate	Qty	Amount	Rate	Qty	Amount
June 1	Opening							80	80	6400
June 3	Purchase	86	270	23220				84.63	350	29620
June 5	Sale				140	220	30800	84.63	130	11002
June 9	Sale				25	15	375	84.63	115	9732.45
June 11	Sale Return	140	30	4200				84.63	145	12271.35
June 13	Purchase	92	110	10120				87.80	255	22391.35
June 15	Purchase Return				92	20	1840	87.80	235	20633
June 17	Sales				152	130	19760	87.80	105	9219
June 19	Purchase	100	70	7000				92.68	175	16219
June 30	Closing Inventory								175	16219

COGS= (220*84.63)+(15*84.63)+(130*87.8)=18618.6+1269.45+11414=31300

Gross Proifit= Sales-COGS=(30800+375+19760)-31300=19635

Part 2

a FIFO method gives highest ending inventory

b LIFO method gives highest COGS