Question

Cost Flow Methods

The following three identical units of Item PX2T are purchased during April:

	Item Beta		Units		Cost
April 2	Purchase		1		$68
April 15	Purchase		1		71
April 20	Purchase		1		74
Total			3		$213
Average cost per unit					$71	($213 ÷ 3 units)

Assume that one unit is sold on April 27 for $91. Determine the gross profit for April and ending inventory on April 30 using the (a) first-in, first-out (FIFO); (b) last-in, first-out (LIFO); and (c) weighted average cost method.

	Gross Profit	Ending Inventory
a. First-in, first-out (FIFO)	$	$
b. Last-in, first-out (LIFO)	$	$
c. Weighted average cost	$	$

Lower-of-Cost-or-Market Method

On the basis of the following data, determine the value of the inventory at the lower-of-cost-or-market by applying lower-of-cost-or-market to each inventory item, as shown in Exhibit 10.

Item	Inventory Quantity	Cost per Unit	Market Value per Unit (Net Realizable Value)
JFW1	116	$52	$57
SAW9	242	27	25

$ ANSWER HERE

Answer 1

Solution: 1
	FIFO METHDO
			COST OF GOODS AVAILABLE FOR SALE	COST OF GOODS SOLD	CLOSING STOCK
	Date	Particulars	Units	Cost Per unit	Total	Units	Cost Per unit	Cost of Goods Sold	Units	Cost Per unit	Ending inventory
	Apr.02	Beginning Balance	1	$             68.00	$                        68	1	$         68.00	$                   68
	Apr.15	Purchases	1	$             71.00	$                        71				1	$         71.00	$                   71
	Apr.20	Purchases	1	$             74.00	$                        74				1	$         74.00	$                   74
		Total Goods Available For sale	3		$                     213	1		$                   68	2		$                 145
	LIFO METHDO
			COST OF GOODS AVAILABLE FOR SALE	COST OF GOODS SOLD	CLOSING STOCK
	Date	Particulars	Units	Cost Per unit	Total	Units	Cost Per unit	Cost of Goods Sold	Units	Cost Per unit	Ending inventory
	Apr.02	Beginning Balance	1	$             68.00	$                        68				1	$         68.00	$                   68
	Apr.15	Purchases	1	$             71.00	$                        71				1	$         71.00	$                   71
	Apr.20	Purchases	1	$             74.00	$                        74	1	$         74.00	$                   74
		Total Goods Available For sale	3		$                     213	1		$                   74	2		$                 139
	WEIGHTED AVERAGE COST METHOD
			COST OF GOODS AVAILABLE FOR SALE	COST OF GOODS SOLD	CLOSING STOCK
	Date	Particulars	Units	Cost Per unit	Total	No. of Kg	Cost Per unit	Cost of Goods Sold	No. of Kg	Cost Per unit	Ending inventory
	Apr.02	Beginning Balance	1	$             68.00	$                        68
	Apr.15	Purchases	1	$             71.00	$                        71
	Apr.20	Purchases	1	$             74.00	$                        74
		Total Goods Available For sale / Avg. Price	3	71.00	213	1	71.00	71	2	71.00	142
			FIFO	LIFO	Average Cost
		Sales	$                      91	$                   91	$                        91
		Less: Cost of Goods Sold	$                      68	$                   74	$                        71
		Gross Profit	$                      23	$                   17	$                        20
		Ending inventory	$                   145	$                 139	$142
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