April 1 (balance on hand) 612 @ $ 6.00 April 3 510 @ $8.42 4 1,530 @ 6.23 9 1,42

Question

April 1

(balance on hand)

612

@

$   6.00

April 3

510

@

$8.42

4

1,530

@

6.23

9

1,428

@

8.42

8

816

@

6.59

11

612

@

10.97

13

1,224

@

6.98

23

1,224

@

10.97

21

714

@

7.09

27

918

@

12.20

29

510

@

7.40

4,692

5,406

Calculate average-cost per unit. (Round answer to 2 decimal places, e.g. 2.76.)

Average-Cost per Unit=$?

Assuming that periodic inventory records are kept in units only, compute the inventory at April 30 using LIFO and average-cost. (Round answer to 0 decimal places, e.g. 2,760.)

Assuming that perpetual inventory records are kept in dollars, determine the inventory using (1) FIFO and (2) LIFO. (Round answer to 0 decimal places, e.g. 2,760.)

FIFO Inventory=$?

LIFO Inventory=$?

Compute cost of goods sold assuming periodic inventory procedures and inventory priced at FIFO. (Round answer to 0 decimal places, e.g. 2,760.)

Cost of Goods Sold=$?

In an inflationary period, which inventory method—FIFO, LIFO, average-cost—will show the highest net income?In an inflationary period, which inventory method—FIFO, LIFO, average-cost—will show the highest net income?

FIFO or LIFO

On the Right-Side of the table are purchases (April 1st).

On the Left-Side of the table are sales (April 3rd).

Please Provide Work or Explanation.

April 1

(balance on hand)

612

@

$   6.00

April 3

510

@

$8.42

4

1,530

@

6.23

9

1,428

@

8.42

8

816

@

6.59

11

612

@

10.97

13

1,224

@

6.98

23

1,224

@

10.97

21

714

@

7.09

27

918

@

12.20

29

510

@

7.40

4,692

5,406

Explanation / Answer

Average-Cost per Unit = total cost / total units

= (612 *6 +1530*6.23+816*6.59+1224*6.98+714*7.09+510*7.40) / 5406

= $35961.12 / 5406

= $ 6.65

If periodic inventory records are kept in units

  inventory at April 30 using LIFO = 612 units as on April1

= 102 unit as on April4

714 units at end

Inventory At April 30 using Average-cost = 714 units

Cost of goods sold assuming periodic inventory procedures and inventory priced at FIFO

   inventory priced = 204units as on 21 April * 7.09 = 1446

   = 510 units as on 29 April * 7.40 = 3774

$5220

Cost of goods sold = 3 April = 510 * 6 = $3060

8 April = 102*6 + 1326 *6.23 = $8873

11April = 204*6.23 + 408 *6.59 = $3960

   23april = 408*6.59 + 816*6.98 = $8385

   27April = 408*6.98 + 510*7.09 = $6464

$30742

In an inflationary period, LIFO inventory will show the highest net income, because of reduction in tax expense done by company

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