The following data are available for Sellco for the fiscal year ended on January

Question

The following data are available for Sellco for the fiscal year ended on January 31, 2017: Sales Beginning inventory Purchases, in chronological order 770 units 250 units 310 units 440 units 200 units @$3 @$5 @$6 @$8 Required: a. Calculate cost of goods sold and ending inventory under the cost fow assumptions, FIFO, LIFO and Weighted average (using a periodic inventory system): (Round unit cost to 2 decimal places.) Cost of Goods Sold Ending Inventory FIFO LIFO Weighted average b. Assume that net income using the weighted-average cost flow assumption is $15,000. Calculate net income under FIFO and LIFO. (Round unit cost to 2 decimal places.) Net Income FIFO LIFO

Explanation / Answer

Solution to part: a. Cost of goods sold($) Ending inventory($) FIFO 3560.00 2980.00 LIFO 4890.00 1650.00 Weighted average 4196.50 2343.50 Workings: FIFO: Cost of goods sold Particular Amount ($) Beginning inventory (250 * $3) 750 Purchases (310 * 5) 1550 (210 * 6) 1260 Cost of goods sold 3560 Ending inventory (430 units) Purchases (440 - 210)*6 1380 (200 * 8) 1600 2980 LIFO: Cost of goods sold Particular Amount ($) Purchases (200 * $8) 1600 (440 * $6) 2640 (130 * $5) 650 4890 Ending inventory (430 units) Purchases (310-130) * $5 900 Beginning inventory (250 * $3) 750 1650 Weighted average: Particular Amount ($) Cost of goods sold (250*3 + 310*5 + 440*6 + 200*8)*770/1200 4196.50 Ending inventory (430 units) (250*3 + 310*5 + 440*6 + 200*8)*430/1200 2343.50 Solution to part: b. Net income($) FIFO 15,636.50 LIFO 14,306.50 Working: Computation of net income FIFO: Amount($) Net income under weighted average 15,000.00 Add: cost of goodS sold under weighted average 4,196.50 Less: cost of goods sold undr FIFO 3,560.00 Net income 15,636.50 FIFO: Amount($) Net income under weighted average 15,000.00 Add: cost of goodS sold under weighted average 4,196.50 Less: cost of goods sold undr FIFO 4,890.00 Net income 14,306.50

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