E6-7·o- -. Compute inventory and cost o goods sold using periodic FIFO LIFO and

Question

E6-7·o- -. Compute inventory and cost o goods sold using periodic FIFO LIFO and average cost (LO 2), AP Jeters Company reports the following for the month of June. Date Explanation Units Unit Cost Total Cost June 1Inventory 20 S5 S 600 12 Purchase 370 62.220 23 Purchase 200 7 1.400 30 Iventory 230 Instructions (a) Compute the cost of the ending inventory and the cost of goods sold under (1) FIFO. 2) LIFO, and (3) average-cost (Round average unit cost to turee decimal places.) (b) Which costing method gives the highest ending inventory? The highest cost of goods sold? Why? (c) How do the average-cost values for ending inventory and cost of goods sold relate to ending inventory and cost of (d) Explain why the average cost is not S6. goods sold for FIFO and LIFO?

Explanation / Answer

FIFO has highest inventory

LIFO has highest cost of goods sold

Units Unit cost Amount 01-Jun Beginning inventory 120 5 600 12-Jun Purchases 370 6 2220 23-Jun Purchases 200 7 1400 Cost of goods available for sale 690 4220 Less Ending inventory 230 Average cost 6.12 Goods sold 460 (4220/690) Ending inventory Average cost 1407 (6.12*230) FIFO Units Per unit Total 12 june purchases 30 6 180 23 june purchases 200 7 1400 Total 230 1580 LIFO 12 june purchases 110 6 660 1 june Inventory 120 5 600 Total 230 1260 Average FIFO LIFO Cost of goods available for sale 4220 4220 4220 Less Ending inventory 1407 1580 1260 Cost of goods sold 2813 2640 2960

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