In: Accounting
Givoly Inc. uses a periodic inventory system. At the end of the annual accounting period, December 31 of the current year, the accounting records provided the following information for product 2:
Units | Unit Cost | ||||||||
Inventory, December 31, prior year | 6,800 | $ | 8 | ||||||
For the current year: | |||||||||
Purchase, March 5 | 18,800 | 6 | |||||||
Purchase, September 19 | 9,800 | 2 | |||||||
Sale ($30 each) | 8,000 | ||||||||
Sale ($32 each) | 15,800 | ||||||||
Operating expenses (excluding income tax expense) | $ | 398,000 | |||||||
Required:
1. Prepare a separate income statement through pretax income that details cost of goods sold for (a) Case A: FIFO and (b) Case B: LIFO. (Loss amounts should be indicated with a minus sign.)
FIFO IS first in first out
Total sales = 8000+15800=23800 (6800sold from beginning and 15000 from March 5 purchase)
cost of goods sold = 6800*$8+ 17000*6
= 156,400
ending inventory = beginning+ purchase - sold
=54,400+(18800*6+9800*2) - 156,400
=54,400+132,400 - 156,400
= 30,400
LIFO last in first out
sales=23800
cost of goods sold=9800*2 + 14000*6 (23800-9800 = 14000sold from march 5 purchase)
= 103,600
Ending inventory = 54,400 + 132,400 - 103,600
= 83,200
Total sales = 8000+15800=23800 (6800sold from beginning and 15000 from March 5 purchase)