Question

Bonita Company had a beginning inventory on January 1 of 200 units of Product 4-18-15 at a cost of $20 per unit. During the year, the following purchases were made. Mar. 15 July 20 430 units 220 units at at $22 $24 Sept. 4 Dec. 2 300 units 100 units at at $25 $29 1,035 units were sold. Bonita Company uses a periodic inventory system.

1)Determine the cost of goods available for sale. The cost of goods available for sale $ Show Solution

2)Calculate average cost per unit. (Round answer to 2 decimal places, e.g. 2.25.) Average cost per unit $ Show Solution

3). Determine (1) the ending inventory, and (2) the cost of goods sold under each of the assumed cost flow methods (FIFO, LIFO, and average). (Round answers to 0 decimal places, e.g. 1,250.) FIFO LIFO AVERAGE-COST The ending inventory $ $ $ The cost of goods sold $ $ $ Show Solution

4)Which cost flow method results in (1) the highest inventory amount for the balance sheet, and (2) the highest cost of goods sold for the income statement? (1) results in the highest inventory amount, $. (2) produces the highest cost of goods sold, $.

Answer 1

Periodic : FIFO Goods Purchasd Inventory Balance Cost of Goods Sold Cost of Cost Per Ending cost of Goods Cost Per Unit Available for sales sold #of Units Cost Per Unit Goods Sold Unit Inventory #of Units #of Units Beginning onventory| Purchases 200 20 4000 200 20 4000 0 20 0 Mar-15 430 22 9460 430 22 9460 0 22 0 5280 5280 Jul-20 Sep-04 220 24 220 24 0 24 0 25 7500 185 25 4625 25 2875 300 115 Dec-02 100 29 2900 0 29 0 100 29 2900 Totals 1250 29140 1035 23365 215 5775 Periodic : LIFO Goods Purchasd Inventory Balance Cost of Goods Sold Cost of Cost Per Ending Unit 200 #of Units Cost Per Unit Goods Sold cost of Goods Inventory Cost Per Unit Available for sales sold #of Units #of Units Beginning onventory| 200 20 4000 0 20 0 20 4000 Purchases Mar-15 415 15 430 22 9460 22 9130 22 330 5280 5280 Jul-20 Sep-04 Dec-02 220 24 220 24 0 24 0 25 7500 25 7500 25 300 300 0 0 100 29 2900 100 29 2900 0 29 0 Totals 1250 29140 1035 215 24810 4330 LC N NNN

Periodic : Weighted Average Inventory Balance Goods Purchasd Cost of Goods Sold # of Units sold Cost of Goods Sold cost of Goods Available for sales Cost Per Ending Inventory Cost Per Unit Cost Per #of Units of Units Unit Unit Beginning onventory 200 Purchases Mar-15 Jul-20 Sep-04 Dec-02 Totals 20 4000 22 24 25 430 9460 220 5280 300 7500 100 2900 29 1250 1035 215 5012 23.31 29140 23.31 24126 23.31 Answers The cost of Goods Available for sale Average Cost per unit =(29140/1250) FIFO 29140 23.31 Weighted Average 5012 LIFO Ending inventoy Cost of Goods Sold 5775 4330 23365 24810 24126 Result in Highest inventory amount 5775 FIFO LIFO Result in Cost of goods sold Amount 24810