How to solve the problem Problem #112 Points PLEASE SHOW ALL OF YOUR WORK AND CO
ID: 2539599 • Letter: H
Question
How to solve the problem Problem #112 Points PLEASE SHOW ALL OF YOUR WORK AND COMPUTATIONS Mango/Papaya Corp. had the following information related to their June, 2017 Inventory nits Price Total 140 260 270 Date $32.00 $4,480 $33.00 $8,580 $38.00 $10,260 6/1/17 Beginning Balance 6/18/17 Purchase 6/23/17 Purchase Mango/Papaya Corp. sold 430 units of inventory at a price of $68 per unit in June. Re uired, Provide the ending invetor in units and cost and Cost of Goods Sold for yúne 2017 using the FIFO (First-in-First-Out) Periodic Accounting method 29 Erding Inventory in Units-muntahdogo)- Ending Inventory Cost- 322, s - X Cost of Goods Sold-44 ang X24013)a (13x31)r 20x38.: 1800 Required: Provide the ending inventory in units and cost and Cost of Goods Sold for June 2017 using the LIFO (Last-in-First-Out) Periodic Accoudting method Ending Inventory in Units = C) u o X39 )79 8 Co Ending Inventory Cost = 11aoy ? 2 ) t Cost of Goods Sold-2
Explanation / Answer
FIFO Method
In FIFO method it is assumed that goods which are purchased first are sold first. In this case the units sold are 430 units. Out of 430 units sold, 140 units should be from beginning balance, 260 units from purchases made on 18 June, 2017 and balance 30 units (430 units - 140 units - 260 units) from purchases made on 23 June, 2017. Hence whole ending inventory is from purchases made on 23 June, 2017.
Ending Inventory in units = Beginning Inventory+Total units purchased-Units sold
= 140 units+(260 units+270 units)-430 units
= 140 units+530 units-430 units = 240 units
Ending Inventory Cost = 240 units*$38 per unit = $9,120
Cost of goods sold = (140 units*$32)+(260 units*$33)+(30 units*$38)
= $4,480+$8,580+$1,140 = $14,200
LIFO Method
In LIFO method it is assumed that goods which are purchased last are sold first. In this case the units sold are 430 units. Out of 430 units sold, 270 units should be purchases made on 23 June, 2017 and balance 160 units (430 units - 270 units) is from purchases made on 18 June, 2017. Hence Ending inventory consist of 140 units from beginning balance and balance 100 units (260 units - 160 units) are from purchases made on 23 June, 2017.
Ending Inventory in units = Beginning Inventory+Total units purchased-Units sold
= 140 units+(260 units+270 units)-430 units
= 140 units+530 units-430 units = 240 units
Ending Inventory Cost = (140 units*$32)+(100 units*$33)
= $4,480+$3,300 = $7,780
Cost of goods sold = (270 units*$38)+(160 units*$33)
= $10,260+$5,280 = $15,540
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