a1. Use the format in Exhibit 8–1 below to compute the ending FIFO inventory and
ID: 2733202 • Letter: A
Question
a1. Use the format in Exhibit 8–1 below to compute the ending FIFO inventory and the cost of goods sold, assuming $90,000 in sales; beginning inventory 500 units @ $50; purchases of 400 units @ $50; 100 units @ $65; 400 units @ $80.
a2. Also compute the cost of goods sold percentage of sales.
b1. Use the format in Exhibit 8–2 below to compute the ending LIFO inventory and the cost of goods sold, using same assumptions.
b2. Also compute the cost of goods sold percentage of sales.
c. Comment on the difference in outcomes.
Home in page yout formation Data Rean view A - - - - Bwing Test General Pan Freeman notes, BI Bih - A-ES at Ful merger a center as R Co . A as conditional for Formatting as a Font Alignment -- X SL Item Assumptions FIFO and LIFO inventory Inventory Effect (FIFO or LIFO ) 10 12 4 6Explanation / Answer
(a 1) Items Asssumptions FIFO Inventory Effect Sales (Revenue) (A) 90000 Cost of Sales Beginning Inventory 500 Units @ $50 25000 Plus Purchases 400 units @ $50 100 units @ $65 400 units @ $80 58500 Subtotal 83500 Less: Ending Inventory 400 Units@ $80 -32000 Cost of Sales (B) 51500 (a 2) Cost of Goods Sold as % of Sales : Cost of Goods Sold/ Sales : 51500/90000 57.22% (b 1) Items Asssumptions LIFO Inventory Effect Sales (Revenue) (A) 90000 Cost of Sales Beginning Inventory 500 Units @ $50 25000 Plus Purchases 400 units @ $50 100 units @ $65 400 units @ $80 58500 Subtotal 83500 Less: Ending Inventory 400 Units@ $500 -20000 Cost of Sales (B) 63500 (b 2) Cost of Goods Sold as % of Sales : Cost of Goods Sold/ Sales : 63500/90000 70.56% ( c) Cost of Sales LIFO 63500 Less: cost of sales FIFO -51500 Difference 400*(80-50) 12000
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