Question

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edugen.wileyplus.com/edugen/lti/main.uni Raken-LeChase Co... Q Accounting 250 Fin... Accrued revenues a... Return to Blackboar us Weygandt, Accounting Principles, 13e Help System Announcements CES Exercise 6-07 a-c Bonita Company uses a periodic system reports the following for the month of June. Total Cost June 1 12 23 30 Inventory Purchase Purchase Inventory nits 210 450 330 150 Unit Cost $7 8 9 $ 1,470 3,600 2,970 Compute the cost of the ending inventory and the cost of goods sold under FIFO and LIFO. FIFO LIFO Cost of the ending inventory $ 1350 1050 Cost of goods sold $ s $ LINK TO TEXT 2 Which costing method gives the higher ending inventory? Study FIFO method LINK TO TEXT Which method results in the higher cost of goods sold? e here to search

Answer 1

.	.	Units	Units cost	Total cost
June 1	Inventory	210	$7	$1470
12	Purchase	450	8	3600
23	Purchase	330	9	2970
30	Inventory	150

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Compute the cost of the ending inventory and the cost of goods sold under FIFO and LIFO

Under FIFO ( Period )

Under FIFO, cost of first goods are assigned to cost of goods sold and and remaining are assigned to ending inventory

.

Total units available = 210 + 450 + 330 = 990

Ending inventory = 150

Units sold = 990 - 150 = 840

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Cost of goods sold (840 units )

1	210	7	1470
12	450	8	3600
1	840 - 210-450 =180	9	1620

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Cost of goods sold = 1470 + 3600 + 1620 = $6690

Ending inventory = 150 * 9 = $1350

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Under LIFO (period)

Under LIFO ( last in first out ), last items cost are assigned to cost of goods sold and first items cost are assigned to ending inventory

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Cost of goods sold (840 units )

23	330	9	2970
12	450	8	3600
1	840 - 330-450 =60	7	420

Cost of goods sold = 2970 + 3600 + 420 = $6990

Ending inventory = 150 * 7 = $1050

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	FIFO	LIFO
Cost of goods sold	$6690	$6990
Ending inventory	$1350	$1050

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Which costing method give higher ending inventory ?

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Ans: FIFO method give higher ending inventory.

Because last items cost are assigned to ending inventory, usually market are inflated and price are increase, so the higher price are assigned to ending inventory.

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Which costing method give higher cost of goods sold ?

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Ans: LIFO method give higher cost of goods sold,

Because last items cost are assigned to cost of goods sold.