Question

Hyper Company had a beginning inventory on January 1 of 160 units of Product 4-18-19 at a cost of $20 per unit. During the year, the following purchases were made. Mar. 15 400 units at $23 Sept. 4 330 units at $26 July 20 250 units at $24 Dec. 2 100 units at $29 1,000 units were sold. Hyper Company uses a periodic inventory system.

Instructions

(a) Determine the cost of goods available for sale.

(b) 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).

(c) 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?

Answer 1

Requirement a

Answer--------$29,880

Working

	Units	Cost per unit	value
Beginning Inventory	160	$          20.00	$       3,200.00
Purchases
15-Mar	400	$          23.00	$       9,200.00
04-Sep	330	$          26.00	$       8,580.00
20-Jul	250	$          24.00	$       6,000.00
02-Dec	100	$          29.00	$       2,900.00
	1240		$     29,880.00

Requirement b

	FIFO	LIFO	Weighted Average
Cost of Goods Sold	$    23,620.00	$ 24,840.00	$     24,096.00
Ending Inventory	$      6,260.00	$    5,040.00	$       5,784.00

Working

Weighted Average Cost
Units	(A)	1240
Total Cost	(B)	$ 29,880.00
Average Cost	(C=B/A)	$          24.10

FIFO
Total Units Avalable for sale		1240
Units Sold		1000
Ending Inventory Units		240
Valuation
Ending Inventory	100	@	$             29.00	$        2,900.00
	140	@	$             24.00	$        3,360.00
Value Of Ending Inventory				$        6,260.00
Cost of Goods sold				$     23,620.00

LIFO
Total Units Avalable for sale		1240
Units Sold		1000
Ending Inventory Units		240
Valuation
Ending Inventory	160	@	$             20.00	$        3,200.00
	80	@	$             23.00	$        1,840.00
Value Of Ending Inventory				$        5,040.00
Cost of Goods sold				$     24,840.00

Weighted Average
Total Units Avalable for sale		1240
Units Sold		1000
Ending Inventory Units		240
Valuation
Ending Inventory	240	@	$             24.10	$        5,784.00
Value Of Ending Inventory				$        5,784.00
Cost of Goods sold	(Total Purchase and opening stock Minus Closing Stock)			$     24,096.00

Requirement c1

FIFO Gives highest amount of inventory for balance sheet

Requirement c2

LIFO gives highest Cost of goods sold