Kingston Company\'s record of transactions for the month of June was as follows.
ID: 2481897 • Letter: K
Question
Kingston Company's record of transactions for the month of June was as follows. Purchases Sales June 1 (balance on hand) 2,000$10.00 1,500 10.05 600 10.50 900 11.00 1,200 11.00 300 11.10 500$21.00 1,60022.00 700 22.00 1,800 21.00 700 23.00 June 5 8 15 20 27 18 30 6,500 Required: I. Assuming that periodic inventory records are kept, compute the inventory at June 30 using (1) LIFO and (2) average cost. 2. Assuming that perpetual inventory records are kept in both units and dollars, determine the inventory at June 30 using (1) FIFO and (2) LIFO. 3. Compute cost of goods sold assuming periodic inventory procedures and inventory priced at FIFO 4. In an inflationary period, which inventory method FIFO, LIFO, average cost-will show the highest net income? Explain.Explanation / Answer
1 Kingston's Company Periodical Inventory Inventory Using LIFO Details Unit Rate Amt $ Sales revenue Opening Balance June 1 2,000 10 20,000 Purchases Jun 2. 1,500 10.05 15,075 Jun 7. 600 10.50 6,300 Jun 15. 900 11.00 9,900 Jun 20. 1,200 11.00 13,200 Jun 27. 300 11.10 3,330 Total Purchase 4,500 47,805 Total Goods available for sale 6,500 10.43 67,805 Sales LIFO - June 5. 500 10.05 5,025 June 8. 600 10.50 6,300 June 8. 1,000 10.05 10,050 June 9. 700 10.00 7,000 June 18. 900 11.00 9,900 June 18. 900 10.00 9,000 June 30. 700 11.00 7,700 - Total Sales 5,300 54,975 - Closing Stock 1,200 10.69 12,830 Kingston's Company Periodical Inventory Inventory Using Avg cost Details Unit Rate Amt $ Sales revenue Opening Balance June 1 2,000 10 20,000 Purchases Jun 2. 1,500 10.05 15,075 Jun 7. 600 10.50 6,300 Jun 15. 900 11.00 9,900 Jun 20. 1,200 11.00 13,200 Jun 27. 300 11.10 3,330 Total Purchase 4,500 47,805 Total Goods available for sale 6,500 10.43 67,805 Sales Avg Cost - June 5. 500 10.43 5,215 June 8. 1,600 10.43 16,688 June 9. 700 10.43 7,301 June 18. 1,800 10.43 18,774 June 30. 700 10.43 7,301 - Total Sales 5,300 10.43 55,279 - Closing Stock 1,200 10.44 12,526 LIFO Avg Cost 1 Inventory June 30 12,830 12,526 FIFO Opening Stock Purchase Total Stock Sales Closing Stock Date Unit Rate Value Unit Rate Value Unit Rate Value Unit Rate Value Unit Rate Value Jun 1. 2,000 10.00 20,000 - - - 2,000 20,000 - - - 2,000 20,000 Jun 2. 2,000 20,000 1,500 10.05 15,075 3,500 35,075 - - - 3,500 35,075 June 5. 3,500 35,075 - - 3,500 35,075 500 10.00 5,000 3,000 30,075 June 7. 3,000 30,075 600 10.50 6,300 3,600 36,375 - - - 3,600 36,375 Jun 8. 3,600 36,375 - - - 3,600 36,375 1,500 10.00 15,000 2,100 21,375 Jun 8. 2,100 21,375 - - 2,100 21,375 100 10.05 1,005 2,000 20,370 Jun 9. 2,000 20,370 - - - 2,000 20,370 700 10.05 7,035 1,300 13,335 Jun 15. 1,300 13,335 900 11.00 9,900 2,200 23,235 - - - 2,200 23,235 Jun 18.. 2,200 23,235 - 2,200 23,235 700 10.05 7,035 1,500 16,200 Jun 18.. 1,500 16,200 - 1,500 16,200 600 10.50 6,300 900 9,900 Jun 18.. 900 9,900 - - - 900 9,900 500 11.00 5,500 400 4,400 Jun 20. 400 4,400 1,200 11.00 13,200 1,600 17,600 - - - 1,600 17,600 Jun 27. 1,600 11.10 17,600 300 11.10 3,330 1,900 20,930 - - - 1,900 20,930 Jun 30. 1,900 20,930 - - - 1,900 20,930 400 11.00 4,400 1,500 16,530 Jun 30. 1,500 16,530 - 1,500 16,530 300 11.00 3,300 1,200 13,230 1,200 13,230 - 1,200 13,230 - 1,200 13,230 1,200 13,230 - 1,200 13,230 - 1,200 13,230 Total 4,500 47,805 5,300 54,575 LIFO Opening Stock Purchase Total Stock Sales Closing Stock Date Unit Rate Value Unit Rate Value Unit Rate Value Unit Rate Value Unit Rate Value Jun 1. 2,000 10.00 20,000 - - - 2,000 20,000 - - - 2,000 20,000 Jun 2. 2,000 20,000 1,500 10.05 15,075 3,500 35,075 - - - 3,500 35,075 June 5. 3,500 35,075 - - 3,500 35,075 500 10.05 5,025 3,000 30,050 June 7. 3,000 30,050 600 10.50 6,300 3,600 36,350 - - - 3,600 36,350 Jun 8. 3,600 36,350 - - - 3,600 36,350 1,000 10.05 10,050 2,600 26,300 Jun 8. 2,600 26,300 - - 2,600 26,300 600 10.50 6,300 2,000 20,000 Jun 9. 2,000 20,000 - - - 2,000 20,000 700 10.00 7,000 1,300 13,000 Jun 15. 1,300 13,000 900 11.00 9,900 2,200 22,900 - - - 2,200 22,900 Jun 18.. 2,200 22,900 - 2,200 22,900 900 11.00 9,900 1,300 13,000 Jun 18.. 1,300 13,000 - 1,300 13,000 900 10.00 9,000 400 4,000 Jun 18.. 400 4,000 - - - 400 4,000 - - - 400 4,000 Jun 20. 400 4,000 1,200 11.00 13,200 1,600 17,200 - - - 1,600 17,200 Jun 27. 1,600 11.10 17,200 300 11.10 3,330 1,900 20,530 - - - 1,900 20,530 Jun 30. 1,900 20,530 - - - 1,900 20,530 700 11.00 7,700 1,200 12,830 Jun 30. 1,200 12,830 - 1,200 12,830 - - - 1,200 12,830 1,200 12,830 - 1,200 12,830 - 1,200 12,830 1,200 12,830 - 1,200 12,830 - 1,200 12,830 Total 4,500 47,805 5,300 54,975 Inventory Jun 30 Units $ value FIFO 1,200 13,230 LIFO 1,200 12,830 3 Kingston's Company Periodical Inventory Inventory Using FIFO Details Unit Rate Amt $ Opening Balance June 1 2,000 10 20,000 Purchases Jun 2. 1,500 10.05 15,075 Jun 7. 600 10.50 6,300 Jun 15. 900 11.00 9,900 Jun 20. 1,200 11.00 13,200 Jun 27. 300 11.10 3,330 Total Purchase 4,500 47,805 Total Goods available for sale 6,500 10.43 67,805 Sales FIFO June 5. 500 10.00 5,000 June 8. 1,500 10.00 15,000 June 8. 100 10.05 1,005 June 9. 700 10.05 7,035 June 18. 700 10.05 7,035 June 18. 600 10.50 6,300 June 18. 500 11.00 5,500 June 30. 700 11.00 7,700 Total Sales 5,300 54,575 Closing Stock 1,200 11.03 13,230 Cost og goods sold FIFO = 54,575 4 In an inflationery period FIFI will show highest net income as the cost of goods sold will be lowest in this method as the lower value initial stocks will be charged to COGS and higher value later purchases will remain in closing stock.
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