Part II:
Answer A:
Ending Inventory = 550 units
Under FIFO ending inventory will be valued based on latest purchases
FIFO Ending inventory = 200 * 11.60 + 350 * 10.80 = $6,100
Under LIFO ending inventory will be based beginning inventory and (if required) based earliest purchases.
LIFO Ending inventory = 400 * 10 + 150 * 10.40 = $5,560
To calculate Weighted average cost let us first calculate total units and cost of goods available for sale:
Weighted average cost per unit = 21120 /2000 = $10.56
Weighted average cost Ending inventory = 550 * 10.56 = $5,808
Hence:
FIFO Ending inventory = $6,100
LIFO Ending inventory = $5,560
Weighted average cost Ending inventory = $5,808
Answer B:
Cost of goods sold = Cost of goods available for sale - Ending Inventory
Cost of Goods sold under each method are as follows:
Answer C:
When prices are rising, FIFO will result in higher inventory (lower cost of goods sold, higher net income) and LIFO will result in lower inventory (higher cost of goods sold, lower net income).
When prices are falling FIFO will result in lower inventory (higher cost of goods sold, lower net income) and FIFO will result in higher inventory (lower cost of goods sold, higher net income)
To get higher net income when prices are rising FIFO will be useful and to get lower net income LIFO will be useful.
Part III:
Answer A:
Double Declining rate = 2 * straight line rate = 2 * 1 / Useful Life = 2/ 5 = 40%
Answer B:
As on 1/1/20 Book value = $12,600
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