Question

Wildhorse Co. had a beginning inventory on January 1 of 308 units of Product 4-18-15 at a cost of $19 per unit. During the year, the following purchases were made. Mar. 15 July 20 uly 20 513 units 820 units 513 units at at $23 $22 $23 Sept. 4 Dec. 2 Sept, 4 718 units 718 units 205 units at at at $25 $25 $28 2,050 units were sold. Wildhorse Co. uses a periodic inventory system. Determine the cost of goods available for sale. The cost of goods available for sale Calculate average cost per unit. (Round answer to 2 decimal places, e.g. 2.23.) Average cost per unit Determine (1) the ending inventory, and (2) the cost of goods sold under each of the assumed cost flow methods (FIFO, LIFO, and average-cost). Prove the accuracy of the cost of goods sold under the FIFO and LIFO methods. (Round answers to 0 decimal FIFO L IFOAVERAGE-COST The ending inventory The cost of goods sold Which cost flow method results in (1) the highest inventory amount for the balance sheet, and (2) the highest cost of goods sold for the income statement? (1) results in the highest inventory amount, S (2) produces the highest cost of goods sold, $

Answer 1

C D F Units Unit cost 1 2 Beg. Inventory 308 1 15-Mar 20-Jul mt non 820 513 718 205 2564 Total cost 190 22 23 25 28 5852 8040 11799 17950 5740 59381 4-Sep 2-Dec 7. Total 8 9 Ending Inventory = 2564-2050= 10 1) 11 Cost of goods available for sale = 59381 12 2) 514 13 Average cost per unit = Total cost/Units 59381/2564 14 23.16 15

LIFO 13440 (308*19)+(205*22) 45941 59381-10362 | Average Cost 10362 514*23.16 49019 59381-11904 11904 47477 16 3) FIFO 17 Ending Inventory (205*28)+(308*25) 18 Cost of goods Sold 59381-13440 19 4) 20 FIFO results in the highest inventory amount $13440 21 LIFO produces the highest Cost of goods Sold $49019