Question

Alternative Inventory Methods Garrett Company has the following transactions during the months of April and May: Date Transaction Units Cost/Unit April 1 Balance 400 17 Purchase 200 $5.50 25 Sale 150 Purchase 100 5.75 May 5 Purchase 250 5.50 18 Sale 300 22 Sale 50 The cost of the inventory on April 1 is $5, $4, and $2 per unit, respectively, under the FIFO, average, and LIFO cost flow assumptions. Required: 1. Compute the inventories at the end of each month and the cost of goods sold for each month for the following alternatives: a. FIFO periodic Cost of Goods Sold Ending Inventory 750 $ 2,925 April 1,800 $ 2,500 May 28

Answer 1

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Answer are highlighted in yellow: Solution: c) LIFO Periodic: End. Inv. COGS April May 850 $ 1,625 $ $ 1,925 $ 1,075 e) Weighted Average: May COGS End. Inv. $1,313 $ 1,688 Periodic: Goods purchased Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost April: LIFO Cost of Goods Sold Ending Inventory Date Apr.01 Apr.17 Apr.28 400 $ 2.00 $ 400 $ 2.00 $ 800 800 200 $ 5.50 $ 50 $ 5.50 $ 150 $ 5.50 $ 1,100 275 825 100 $ 5.75 $ 100 $ 5.75 $ 575 575 $ 550 $ 150 $ $ 850 1,625 700 2,475 Goods purchased Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost 400 $ LIFO Cost of Goods Sold Ending Inventory May: Date 2.00 $ May.01 2.00 $ 400 $ 800 800 50 $ 150 $ 5.50 $ 100 S 5.50 S 5.50 S 825 550 275 May.05 250 $ 5.50 $ 250 $ 5.50 $ $ 1,375 1,375 $ $ $ 1,925 800 3,000 350 450 1,075

Goods purchased WA: Ending Inventory Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost Cost of Goods Sold May: Date May.01 400 $ 2.00 $ 800 5.50 $ 150 S 825 May.05 $ $ $ 2. 1,375 3.75 $ 350 $ 450 $ 3.75 $ 1,313 1,688 $ 350 $ 450 $ 800 1,313 1,688 3,000