Question

The following data are available for Sellco for the fiscal year ended on January 31, 2020:

Sales	750	units
Beginning inventory	280	units	@	$	3
Purchases, in chronological order	300	units	@	$	5
	420	units	@	$	7
	240	units	@	$	7

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.)
   Cost of goods sold    Ending enventory

FIFO

LIFO

Weighted Average

b. Assume that net income using the weighted-average cost flow assumption is $13,300. Calculate net income under FIFO and LIFO. (Round unit cost to 2 decimal places.)

   NET INCOME

FIFO

LIFO

Answer 1

a)

FIFO:

Ending Inventory
Date	units	Per unit	Total
2	250	$7	$1,750
3	240	$7	$1,680
Total	490		$3,430
Cost of Goods sold
Date	units	Per unit	Total
Beg	280	$3	$840
1	300	$5	$1,500
2	170	$7	$1,190
Total	750		$3,530

LIFO

Ending Inventory
Date	units	Per unit	Total
Beg	280	$3	$840
1	210	$5	$1,050
Total	490		$1,890
Cost of Goods sold
Date	units	Per unit	Total
3	240	$7	$1,680
2	420	$7	$2,940
1	90	$5	$450
Total	750		$5,070

Weighted Average

Average cost per unit = $6960 / 1240 = $5.61

Ending inventory = 490 x $5.61 = $2750

Cost of goods sold = 750 x $5.61 = $4210

	Cost of goods sold	ending inventory
FIFO	$3,530	$3,430
LIFO	$5,070	$1,890
Weighted Average	$4,210	$2,750

b.

Total sale value = Weigthed average COGS + Net income

= $4210 + $13,300

= $17,510

FIFO net income = $17,510 - $3,530 = $13980

LIFO net income = $17,510 - $5,070 = $12,440  

	Net income
FIFO	$13,980
LIFO	$12,440