Question

Sheffield Company had a beginning inventory on January 1 of 190 units of Product 4-18-15 at a cost of $20 per unit. During the year, the following purchases were made.

Mar. 15		450 units		at		$23		Sept. 4		350 units		at		$25
July 20		230 units		at		$24		Dec. 2		100 units		at		$26

1,100 units were sold. Sheffield Company uses a periodic inventory system.

(b1)

Calculate average cost per unit. (Round answer to 3 decimal places, e.g. 1.250.)

Average cost per unit

$Enter the average cost per unit in dollars

B) Determine (1) the ending inventory, and (2) the cost of goods sold under each of the assumed cost flow methods (FIFO, LIFO, and average-cost) . Prove the accuracy of the cost of goods sold under the FIFO and LIFO methods.

C) 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.

Answer 1

20 23 25 25 0 26/ 1001 220 Periodic: FIFO Goods Purchasd Cost of Goods Sold | Inventory Balance Cost of cost of Goods # of Units Cost Per Goods Cost Per Ending # of Units Cost Per Unit Available for sales sold Unit Sold # of Units Unit Inventory Beginning onventory 190 3800 190 20 3800 Purchases Mar-15 450 23 10350 4501 23 10350 Jul-20 230 5520 230 24 5520 Sep-04 350 8750 230 5750 120 3000 Dec-02 1001 2600 26 2600 Totals 1320 310201 1100 25420 5600 Periodic: LIFO Goods Purchasd Cost of Goods Sold Inventory Balance Cost of cost of Goods # of Units Cost Per Goods Cost Per Ending # of Units Cost Per Unit Available for sales sold Unit Sold # of Units Unit Inventory Beginning onventory 190 3800 0 20 0 1901 20 3800 Purchases Mar-15 450 10350 420 9660 690 Jul-20 230 5520 230 5520 Sep-04 350 8750 350 8750 Dec-02) 100 2600 100 2600 Totals 13201 310201 1100 26530 4490 20 24 26 220

Periodic : Weighted Average # of Cost Per # of Units Goods Purchasd cost of Goods Cost Per Unit Available for sales 20 3800 Units Cost of Goods Sold Unit Cost Per Ending Unit Inventory # of Units sold 190 Beginning onventory Purchases Mar-15 Jul-20 Sep-04 Dec-02 Totals 23 24 450 230 350 100 25 10350 5520 8750 2600 31020 26 1320 23.500 1100 23.500 25850 220 23.500 5170 Answers Average Cost per unit =(31020/1320) FIFO LIFO Ending inventoy 5600 Cost of Goods Sold 25420 23.500 Weighted Average 4490 5170 26530 25850 FIFO LIFO Result in Highest inventory amount Result in Cost of goods sold Amount 5600 26530