Question

Problem 3: Beaver Inventory Problem Beaver Company has the following inventory transactions for the month of April: Purchases Sales April 1 (beginning balance) April Units 600 1,500 800 1,200 700 500 Cost $6.00 $6.08 $6.40 $6.50 $6.60 $6.79 3 9 11 23 27 Units 500 1,400 600 1,200 900 29 Required: 1. Assume Beaver Company uses periodic inventory records. Determine the value of ending inventory using: a. FIFO b. LIFO c. Average-cost

Answer 1

Periodic Inventory :: Computation of closing units: Date Particulars Units 01-Apr Opening Balance 600 04-Apr Purchases 1,500 08-Apr Purchases 800 13-Apr Purchases 1,200 21-Apr Purchases 700 29-Apr Purchases 500 Goods available for sales 5,300 Less: Units Sold 4,600 Closing Units 700 Rate 6.00 6.08 6.40 6.50 6.60 6.79 Value 3,600 9,120 5,120 7,800 4,620 3,395 33,655 a) FIFO ending inventory value is :- Under FIFO, First purchased are sold first and last purchased will be in ending inventory Accordingly, Ending inventory of 700 units will be from 29th April of 500 units and 21st April of 200 units purchases. Value of ending inventory is = (500*6.79)+(200*6.60) Value of ending inventory is = $ 4,715/. b) LIFO ending inventory value is :- Under LIFO, Last purchased are sold first and first purchased will be in ending inventory Ending inventory of 700 units will be from beginning inventory of 600 units and 100 units from 4th April purchases. Value of ending inventory is = (600*6)+(100*6.08) Value of ending inventory is = $ 4,208/. c) Average cost per unit is = (Total cost of goods available for sale/Total units available for sale) Average cost per unit is = (33655/5300) Average cost per unit is - $ 6.35/. Value of ending inventory is = (700*6.35) Value of ending inventory is = $ 4,445/.