Lan Enterprises uses a periodic inventory system for buckets it sells. It had a

Question

Lan Enterprises uses a periodic inventory system for buckets it sells. It had a beginning inventory on April 1 of 80 units at a cost of $6 per unit. During April, the following purchases and sales were made. Instructions: Compute the April 30 ending inventory and April cost of goods sold under (a) average cost, (b) FIFO, and (c) LIFO. Provide appropriate supporting calculations. (1) Average - Ending Inventory = $ Cost of Goods Sold = $ (2) FIFO - Ending Inventory = $ Cost of Goods Sold = $ (3) LIFO - Ending Inventory = $ Cost of Goods Sold = $

Explanation / Answer

1.

Ending inventory units(400-330)=70 units

Ending inventory($)(7.36*70) =515

2.FIFO=First in first out method

In this case , closing inventory of 70 units consists of 20 units @8 purchased on 23th august and 50 units@$8.5purchased on 29th ,

Therefore Ending inventory =$ 585(20*8+50*8.5)

Cost of goods sold =Cost of goods available for sale - Ending inventory=2945-585=$ 2360

3.LIFO method:Last in first out

In this case , closing inventory of 70 units are from opening inventory ,

Ending inventory (70*6)=$420

Cost of goods sold =2945-420=$2525

Average cost method Particulras Units Rate Cost Opening-August 80 6 480 7 60 7 420 13 120 7.5 900 23 90 8 720 29 50 8.5 425 Cost of goods available for sale 400 $ 2945

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