P5.32

 

 Cost flow assumptions—FIFO, LIFO, and weighted average using a 
periodic system  The following data are available for Sellco for the fiscal year 
ended on January 31, 2014: 
  Units Unit Price $  
Sales                 3,200      
Beginning Inventory                 1,000 $4.00 $4,000  
Purchases -in date order                 1,200 $5.00 $6,000  
                1,600 $6.00 $9,600  
                    800 $8.00 $6,400  
 Required: 
 a.  Calculate cost of goods sold and ending inventory under the following cost flow 
assumptions (using a periodic inventory system): 
 1.  FIFO. 
  Units Unit Price $ $
Beginning Inventory                 1,000 $4.00   $4,000
Purchases  
                  1,200 $5.00 $6,000  
                1,600 $6.00 $9,600
                    800 $8.00 $6,400 $22,000
Available                 4,600     $26,000
Ending Inventory (1,000 +3,600 less 3,200) = 1,400    
     
      $0
CGS    
 2.  LIFO
  Units Unit Price $ $
Beginning Inventory                 1,000 $4.00   $4,000
Purchases  
                  1,200 $5.00 $6,000  
                1,600 $6.00 $9,600
                    800 $8.00 $6,400 $22,000
Available                 4,600     $26,000
Ending Inventory (1,000 +3,600 less 3,200) = 1,400    
     
      $0
CGS    
 3.  Weighted average. Round the unit cost answer to two decimal places and 
ending inventory to the nearest $10. 
Beginning Inventory                 1,000 $4.00   $4,000
Purchases  
                  1,200 $5.00 $6,000  
                1,600 $6.00 $9,600
                    800 $8.00 $6,400 $22,000
Available                 4,600     $26,000
Weighted Average      
Cost of Goods sold-3,200 units  
Ending Inventory    
 b.  Assume that net income using the weighted-average cost flow assumption is 
$116,000. Calculate net income under FIFO and LIFO. 
Weighted Average proof
Income    
CGS  
Sales value  
FIFO Income
Sales    
CGS  
Net Income  
LIFO Incme
Sales    
CGS  
Net Income  

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