Exercise 8-10 (1) LIFO (2) FIFO LINK TO TEXT LINK TO TEXT LINK TO TEXT SAVE FOR

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Exercise 8-10

(1)
LIFO

(2)
FIFO

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Exercise 8-10

Inventory information for Part 311 of Stellar Corp. discloses the following information for the month of June.
June 1 Balance 301 units @ $12 June 10 Sold 197 units @ $29 11 Purchased 803 units @ $14 15 Sold 500 units @ $30 20 Purchased 502 units @ $16 27 Sold 297 units @ $32 Assuming that the periodic inventory method is used, compute the cost of goods sold and ending inventory under (1) LIFO and (2) FIFO.

(1)
LIFO

(2)
FIFO

Cost of Goods Sold $

$

Ending Inventory $

$

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Assuming that the perpetual inventory method is used and costs are computed at the time of each withdrawal, what is the value of the ending inventory at LIFO?
The ending inventory at LIFO $

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Assuming that the perpetual inventory method is used and costs are computed at the time of each withdrawal, what is the gross profit if the inventory is valued at FIFO?
Gross Profit (FIFO) $

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Explanation / Answer

Assuming that the periodic inventory method is used, compute the cost of goods sold and ending inventory under (1) LIFO and (2) FIFO.

Calculate ending inventory under LIFO perpetual method :

Ending inventory = (104*12+303*14+205*16) = 8770

Assuming that the perpetual inventory method is used and costs are computed at the time of each withdrawal, what is the gross profit if the inventory is valued at FIFO?

Under FIFO method perpetual and periodic inventory system calculation is same. so gross profit under FIFO method is $16903.

FIFO LIFO Beginning inventory 3612 3612 Purchase 19274 19274 Cost of goods available for sale 22886 22886 Ending inventory (110*14+502*16)=9572 (311*14+301*12)=7966 Cost of goods sold 13314 14920 Sales 30217 30217 Gross profit 16903 15297

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