Question

Inventory Costing Methods-Periodic Method Chen Sales Corporation uses the periodic inventory system. On January 1, 2012, Chen had: 1,000 units of product A with a unit cost of $70 per unit. A summary of purchases and sales during 2012 follows:

	Unit Cost	Units Purchased	Units Sold
Feb.2			400
Apr.6	$72	1,800
July 10			1,600
Aug.9	76	800
Oct.23			800
Dec.30	79	1,200

Required

1. Assume that Chen uses the first-in, first-out method. Compute the cost of goods sold for 2012 and the ending inventory balance at December 31, 2012, for product A.
2. Assume that Chen uses the last-in, first-out method. Compute the cost of goods sold for 2012 and the ending inventory balance at December 31, 2012, for product A.
3. Assume that Chen uses the weighted-average cost method. Compute the cost of goods sold for 2012 and the ending inventory balance at December 31, 2012, for product A.

Do not round until your final answers. Round your answers to the nearest dollar.

a.	First-in, First-out:
	Ending Inventory	Answer
	Cost of Goods Sold	Answer
b.	Last-in, first-out:
	Ending Inventory	Answer
	Cost of Goods Sold	Answer
c.	Weighted Average
	Ending Inventory	Answer
	Cost of goods sold	Answer

d. Assuming that Chen’s products are perishable items, which of the three inventory costing methods would you choose to:
Assume this is during a period of rising costs.

1. Reflect the likely goods flow through the business?	AnswerFirst-in, first outLast-in, first outWeighted-average cost
2. Minimize income taxes for the period?	AnswerFirst-in, first outLast-in, first outWeighted-average cost
3. Report the largest amount of net income for the period?	AnswerFirst-in, first outLast-in, first outWeighted-average cost

Answer 1