Question

Larson Company’s record of transactions for the month of April was as follows. Purchases Sales April 1

Purchases Sales April 1 (balance on hand) 700 @ $5.00 April 3 600 @ $10.00 9 1,700 @ 10.00 1,600 @ 5.50 00 1,000 6.00 11 700 @ 11.00 13 1,400 @ 6.50 23 1,400 @ 12.00 21 900 @ 7.00 27 1,000 @ 12.00 5,400 29 600 @ 7.10 6,200

Show your calculations.

A. Calculate Ending Inventory and Cost of Goods Sold using the periodic average cost method.

B. Calculate Ending Inventory and Cost of Goods Sold using the periodic LIFO method.

C. Calculate Ending Inventory and Cost of Goods Sold using the periodic FIFO method.

D. What is Gross Profit using the periodic FIFO method?

Answer 1

Solution

	Weighted Average
Ending Inventory	$             4,898
Cost of Goods Sold	$           33,062

.

	LIFO
Ending Inventory	$                   4,050
Cost of Goods Sold	$                 33,910

.

	FIFO
Ending Inventory	$           5,660
Cost of Goods Sold	$        32,300

.

Gross profit by FIFO = $27,200

Working

	Units	Cost per unit	value
Beginning Balance	700	$                     5.00	$ 3,500
Purchases
	1600	$                     5.50	$ 8,800
	1000	$                     6.00	$ 6,000
	1400	$                     6.50	$ 9,100
	900	$                     7.00	$ 6,300
	600	$                     7.10	$ 4,260
Cost of goods available for sale	6200		$ 37,960

.

Average Cost of Inventory
Units	(A)	6200
Total Cost	(B)	$ 37,960
Average Cost	(C=B/A)	$ 6.12

.

FIFO
Total Units Available for sale		6200
Units Sold		5400
Closing Stock in Units		800
Valuation
Ending Inventory	600	@	$               7.10	$ 4,260
	200	@	$               7.00	$ 1,400
Value Of Ending Inventory				$ 5,660
Cost of Goods sold	37960 minus 5660			$      32,300.00
LIFO
Total Units Available for sale		6200
Units Sold		5400
Closing Stock in Units		800
Valuation
Ending Inventory	700	@	$               5.00	$ 3,500
	100	@	$               5.50	$ 550
Value Of Ending Inventory				$              4,050
Cost of Goods sold	37960 minus 4050			$            33,910
Weighted Average method
Total Units Available for sale		6200
Units Sold		5400
Closing Stock in Units		800
Valuation
Ending Inventory	800	@	$               6.12	$              4,898
Value Of Ending Inventory				$              4,898
Cost of Goods sold	(Total Purchase and opening stock Minus Closing Stock)			$            33,062

.