Question

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Questions 6, 7, and 8 are based on the table provided: A new company in its first year of operations purchases six products on sale in the order and the costs as shown: Unit #1 Cost per Unit $ 5 $10 $12 $15 $17 #5 #6 $19 6. If the company uses the cost flow assumption of FIFO, what would be the total cost of goods sold if three units are sold, and the corresponding ending inventory cost to be reported in the balance sheet? (a) Cost of goods sold = $27; Ending inventory = $51. for Cost of goods sold = $51; Ending inventory = $27. (c) Cost of goods sold = $39; Ending inventory = $39. (d) Cost of goods sold = $32; Ending inventory = $46. 7. What would the cost of goods sold and ending inventory be if LIFO was used instead? (a) Cost of goods sold = $27; Ending inventory = $51.

Answer 1

6 FIFO method the purchase price of first purchased products are considered first for calculating cost of goods sold remaining are ending inventory 5+10+12 = cost of units sold for three units = ending inventory = 15+17+19= $ $ 27 51 7 LIFO method the purchase price of last purchased products are considered first for calculating cost of goods sold remaining are ending inventory cost of units sold for three units = ending inventory = 19+17+15 = 12+10+5 = $ $ 51 27 8 Average method Average price of all purchased products are considered first for calculating cost of goods sold and ending inventory average price = (19+17+15+12+10+5)/6 average price = sold inventory = 3 units. Ending inventory = 6 units -3 units=3 units $ 39 cost of units sold for three units = ending inventory = 13 x 3 = 13 x 3= please comment if you have any doubt Please give thumps up if you satisfied with the answer