Question

The following data are available for Sellco for the fiscal year ended on January 31, 2017:

Sales	750	units
Beginning inventory	230	units	@	$	4
Purchases, in chronological order	300	units	@	$	4
	450	units	@	$	7
	210	units	@	$	8

Required:

a. Calculate cost of goods sold and ending inventory under the cost flow assumptions, FIFO, LIFO and Weighted average (using a periodic inventory system): (Round unit cost to 2 decimal places.)

b. Assume that net income using the weighted-average cost flow assumption is $14,500. Calculate net income under FIFO and LIFO. (Round unit cost to 2 decimal places.)

Answer 1

• All working forms part of the answer
• Workings

FIFO	Cost of Goods available for sale			Cost of Goods Sold			Ending Inventory
	Units	Cost/unit	COG for sale	Units sold	Cost/unit	COGS	Units	Cost/unit	Ending inventory
Beginning Inventory	230	$                   4.00	$                            920.00	230	$           4.00	$              920.00	0	$           4.00	$                         -
Purchases:
#1	300	$                   4.00	$                        1,200.00	300	$           4.00	$           1,200.00	0	$           4.00	$                         -
#2	450	$                   7.00	$                        3,150.00	220	$           7.00	$           1,540.00	230	$           7.00	$            1,610.00
#3	210	$                   8.00	$                        1,680.00	0	$           8.00	$                        -	210	$           8.00	$            1,680.00
TOTAL	1190		$                        6,950.00	750		$           3,660.00	440		$            3,290.00

LIFO	Cost of Goods available for sale			Cost of Goods Sold			Ending Inventory
	Units	Cost/unit	COG for sale	Units sold	Cost/unit	COGS	Units	Cost/unit	Ending inventory
Beginning Inventory	230	$                   4.00	$                            920.00	0	$           4.00	$                        -	230	$           4.00	$                920.00
Purchases:	0	$                       -	$                                     -
#1	300	$                   4.00	$                        1,200.00	90	$           4.00	$              360.00	210	$           4.00	$                840.00
#2	450	$                   7.00	$                        3,150.00	450	$           7.00	$           3,150.00	0	$           7.00	$                         -
#3	210	$                   8.00	$                        1,680.00	210	$           8.00	$           1,680.00	0	$           8.00	$                         -
TOTAL	1190		$                        6,950.00	750		$           5,190.00	440		$            1,760.00

Average Method	Cost of Goods available for sale			Cost of Goods Sold			Ending Inventory
	Units	Cost/unit	COG for sale	Units sold	Cost/unit	COGS	Units	Cost/unit	Ending inventory
Beginning Inventory	230	$                   4.00	$                            920.00
Purchases:	0	$                       -	$                                     -
#1	300	$                   4.00	$                        1,200.00
#2	450	$                   7.00	$                        3,150.00
#3	210	$                   8.00	$                        1,680.00
TOTAL	1190	$              5.84	$                        6,950.00	750	$           5.84	$             4,380.0	440	$           5.84	$            2,570.00

• Requirement ‘a’

	Ending Inventory	Cost of Goods Sold
FIFO	$             3,290.00	$            3,660.00
LIFO	$             1,760.00	$            5,190.00
Weighted Average	$             2,569.60 or $ 2,570.00	$            4,380.00

• Requirement ‘b’

	FIFO	LIFO
Net Income as per Weighted Average	$          14,500.00	$          14,500.00
Add: Cost of Goods Sold as per Weighted Average Method	$               4,380.0	$               4,380.0
Less: Cost of Goods sold as per respective Methods	$             3,660.00	$            5,190.00
NET INCOME [Answer]	$          15,220.00	$          13,690.00