Lawrence owns a small candy store that sells one type of candy. His beginning in

Question

Lawrence owns a small candy store that sells one type of candy. His beginning inventory of candy as made up of 10000 boxes costing 1.50 per box (15000) and he made the following purchases of candy during the year; March 1, 10000 boxes at 1.60 =16000. August 15, 20000 boxes 1.70 per boxes = 34000. November 20, 10000 at 1.80 per boxes. At the end of the year, Lawrence's inventory consisted of 15000 boxes of candy. (A). Calculate Lawrence's ending inventory and cost of goods sold using the FIFO inventory valuation method. Ending inventory------. Cost of goods sold$------. (B) Calculate Lawrence's ending inventory and cost of sold using LIFO inventory valuation method. Ending inventory $-----. Cost of goods sold.$-----.

Explanation / Answer

Units Unit cost Total Beginning inventory 10000 1.5 15000 1-Mar 10000 1.6 16000 15-Aug 20000 1.7 34000 20-Nov 10000 1.8 18000 Total 50000 83000 A FIFO method: Ending inventory 26500 =(10000*1.8)+(5000*1.7) Cost of goods sold 56500 =83000-26500 B LIFO method: Ending inventory 23000 =(10000*1.5)+(5000*1.6) Cost of goods sold 60000 =83000-23000

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