E8-11 (LO3) (FIFO, LIFO and Average-Cost Determination) John Adams Company\'s re

Question

E8-11 (LO3) (FIFO, LIFO and Average-Cost Determination) John Adams Company's record of transactions for the month of April was as follows. Purchases Sales April 1 (balance on hand) 600 $6.00 1,500 6.08 800 6.40 ,200 6.50 500$10.00 1,400 10.00 600 11.00 1,200 11.00 27 90012.00 April 3 9 1,400 13 21 29 23 7006.60 500 6.79 4,600 5,300 Instructions (a) Assuming that periodic inventory records are kept in units only, compute the inventory at April 30 using (1) LIFO and (2) average-cost. (b) Assuming that perpetual inventory records are kept in dollars, determine the inventory using (1) FIFO and (2) LIFO. () Compute cost of goods sold assuming periodic inventory procedures and inventory priced at FIFO. (d) In an inflationary period, which inventory method -FIFO, LIFO, average-cost-will show the highest net income

Explanation / Answer

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

Average-cost per unit = 33655/5300

Average-cost per unit = $ 6.35

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.)

Ending Inventory in Units = 5300 -4600 = 700 Units

Inventory at April 30 using LIFO = 600*6 + 100*6.08

Inventory at April 30 using LIFO = $ 4208

Inventory at April 30 using Average-cost = 700*6.35

Inventory at April 30 using Average-cost = $ 4445

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.)

Inventory at April 30 using LIFO = 100*6 + 100*6.08 + 500*6.79

Inventory at April 30 using LIFO = $ 4603

Inventory at April 30 using FIFO = 500*6.79 + 200*6.60

Inventory at April 30 using FIFO = $ 4715

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 = Total Purchases - Inventory at April 30 using FIFO

cost of goods sold = 33655-4715

cost of goods sold = $ 28,940

Purchases Apr-01 (balance on hand) 600 @ 6 3600 4 1,500 @ 6.08 9120 8 800 @ 6.4 5120 13 1,200 @ 6.5 7800 21 700 @ 6.6 4620 29 500 @ 6.79 3395 5,300 33655

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