Question

1. The following information pertains to Julia & Company:

March		1		Beginning inventory = 30 units @ $5.40
March		3		Purchased 14 units @ 3.50
March		9		Sold 24 units @ 8.50

What is the ending inventory balance for Julia & Company assuming that it uses FIFO?

a. $49

b. $81

c. $64

d. $108

2. Northwest Fur Co. started the year with $96,000 of merchandise inventory on hand. During the year, $415,000 in merchandise was purchased on account with credit terms of 1/15, n/45. All discounts were taken. Northwest paid freight-in charges of $8,000. Merchandise with an invoice amount of $4,400 was returned for credit. Cost of goods sold for the year was $376,000. What is ending inventory?

a. $138,489

b. $134,494

c. $138,600

d. $39,000

3. Inventory records for Dunbar Incorporated revealed the following:

Date		Transaction	Number of Units			Unit Cost
Apr.	1	Beginning inventory		470		$	2.32
Apr.	20	Purchase		320			2.55

Dunbar sold 650 units of inventory during the month. Cost of goods sold assuming LIFO would be:

a. $1,234

b. $1,508

c. $1,582

d. $1,549

Answer 1

Answer-1)- The ending inventory balance for Julia & Company assuming that it uses FIFO = $81.

Explanation-

FIFO Method
	Goods purchased	Cost of goods sold	Inventory balance
Date	# of units	Cost per unit	# of units sold	Cost per unit	Cost of goods sold	# of units	Cost per unit	Inventory balance
Mar-01	30	5.40				30	5.40	162
Mar-03	14	3.50				30	5.40	162
						14	3.50	49
Mar-09			24	5.40	130	6	5.40	32
						14	3.50	49
Totals			24		130	20		81

Answer- Ending inventory is = $134494.

Explanation- Ending inventory = Beginning merchandise inventory+ Merchandise purchased+ Freight- Discount amount-Merchandise returned- Cost of goods sold

= $96000+$415000+$8000- {($415000-4400)*1%}- $4400-$376000

= $96000+$415000+$8000-$4106-$4400-$376000

= $134494

Answer- Cost of goods sold assuming LIFO would be = $1582.

Explanation-

LIFO Method
	Goods purchased	Cost of goods sold	Inventory balance
Date	# of units	Cost per unit	# of units sold	Cost per unit	Cost of goods sold	# of units	Cost per unit	Inventory balance
Apr-01	470	2.32				470	2.32	1090.4
Apr-20	320	2.55				470	2.32	1090.4
						320	2.55	816
Apr-30			320	2.55	816	140	2.32	325
			330	2.32	766
Totals			650		1582	140		325