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2. 43.33 points Jones Co. started the year with no inventory. During the year, it purchased two identical inventory items at different times. The first purchase cost $1,060 and the other, $1,380. Jones sold one of the items during the Required Based on this information, how much product cost would be allocated to cost of goods sold and ending inventory on the year-end financial statements, assuming use of a. FIFO? b. LIFO? c. Weighted average? Weighted LIFO Average Cost of goods sold Ending inventory
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Amounts in $ FIFO LIFO Weighted average Cost of goods solod Ending inventory d1,060 1,220 1,220 1,380 ,380 1,000220Explanation Under FIFO method the first goods purchased are sold first.In this case, first purchased inventory was $1,060.So, cost of goods sold is $1,060. And the remaining $1,380 inventory is ending inventory. Under LIFO method the last item of inventory purchased is the first one sold.In this case, last purchased inventory was $1,380.So, cost of goods sold is $1,380. And the remaining $1,060 inventory is ending inventory. Weighted average method is an inventory costing method that assigns average costs to each piece of inventory when it is sold during the year.In this case ($1060+ $1,380)/2 = Cost of goods sold. So Cost of goods sold =$1,220. And Ending inventory = ($ 1,060 +$1,380) - Cost of goods sold -$ 1,220

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