Question

In: Accounting

1. Oriole Company jus began business and made the following four inventory purchases: June 1 174...

1. Oriole Company jus began business and made the following four inventory purchases:

June 1 174 units $1044
june 10 232 units $1624
june 15 232 unit $1856
june 28 174 unit 1566

total $6090

Physical count reveals 232 on June 30 on hand. using the LIFO inventiry method, the value if the ending inventory on June 30

2. Oriole Company jus began business and made the following four inventory purchases:

June 1 192 units $1152
june 10 256 units $1792
june 15 256 unit $2048
june 28 192 unit 1728

total $6720

Physical count reveals 256 on June 30 on hand. using the average cost inventiry method, the value if the ending inventory on June 30

3.Oriole Company jus began business and made the following four inventory purchases:

June 1 132 units $792
june 10 176 units $1232
june 15 176 unit $1408
june 28 132 unit 1188

total $4620

Physical count reveals 176 on July 30 on hand. using the FIFO inventiry method, the value if the ending inventory on June 30

Solutions

Expert Solution

1) Ending Inventory under LIFO Method : Under LIFO method, The inventory which comes last in the warehouse is used first. So, in this case ending inventory will be from the inventory purchased very first.

On June 30, there are 232 units in Ending Inventory, from which 174 units of value $1,044 are from June 1 purchase and the remaining 58 units (232 units - 174 units) of value $406 [($1,624/232)*58] are from June 10 purchase.

So, the total value of Ending Inventory = $1,044+$406 = $1,450

2) Ending Inventory under Average Cost Inventory  Method : Under Average Cost Inventory Method, The weighted average cost is charged to the cost of Goods Sold and Ending Inventory.

The Average Cost per unit of Inventory = Total Cost of Inventory Purchased/ No. of Units Purchased

= ($1152 +$1792 +$2048+ $1,728)/(192 +256+256+192)

= ($6,720/896) = $7.5 per unit

Value of Ending Inventory = No. of Units in inventory * Average cost per unit

= 256 units* $7.5 = $1,920

3) Ending Inventory under FIFO Method : Under FIFO method, The inventory which comes first in the warehouse is used first. So, in this case ending inventory will be from the inventory purchased last.

On June 30, there are 176 units in Ending Inventory, from which 132 units of value $1,188 are from June 28 purchase and the remaining 44 units (176 units - 132 units) of value $ 352 [($1,408/176)*44] are from June 15 purchase.

So, the total value of Ending Inventory = $1,188+$352 = $1,540

ekkarill92 answered 2 weeks ago
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