Question

Plato Company reports the following for the month of June.

Date	Explanation	Units	Unit Cost	Total Cost
June   1	Inventory	225	$5	$1,125
12	Purchase	525	6	3,150
23	Purchase	750	7	5,250
30	Inventory	330

Instructions

(a)    Calculate the cost of the ending inventory and the cost of goods sold for each cost flow assumption [LIFO,FIFO], using a perpetual inventory system. Assume a sale of 570 units occurred on June 15 for a selling price of $8 and a sale of 600 units on June 27 for $9. (Note: For the average-cost method, round unit cost to three decimal places.)

Answer 1

Given case we are required to calculate cost of goods sold and value of ending inventory using LIFO and FIFO methods :-

Calculation of ending inventory and cost of goods sold using LIFO :-

Date	Particulars	units (A)	cost per unit (B)	total amount (A×B)
June 1	opening inventory	225	5	1125
June 12	purchase	525	6	3150
June 15	sale	(525)	6	(3150)
	Sale	(45)	5	(225)
June 23	purchase	750	7	5250
June 27	sale	(600)	7	(4200)
June 30	closing inventory (330 units)	150	7	1050
		180	5	900

Closing balance as per LIFO = 1050 + 900 = $1950

Cost of goods sold as per LIFO = 3150 + 225 + 4200 = $7575.

Calculation of closing inventory and cost of goods sold as per FIFO :-

Date	Particulars	units (A)	cost per unit (B)	amount (A×B)
June 1	opening inventory	225	5	1125
June 12	purchase	525	6	3150
June 15	sale	(225)	5	(1125)
	Sale	(345)	6	(2070)
June 23	purchase	750	7	5250
June 27	sale	(180)	6	(1080)
		(420)	7	(2940)
June 30	closing inventory	330	7	2310

The value of closing inventory as per FIFO = $2310

cost of goods sold as per FIFO = $1125 + $2070 + $1080 + 2940 = $7215

there is no information in the question that asking the value of closing inventory and cost of goods sold as per weighted average method hence, we ignore it.

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