Question

Novak Company’s record of transactions for the month of April was as follows.

Purchases							Sales
April 1	(balance on hand)		1,740	@	$6.00		April 3		1,450	@	$10.00
4			4,350	@	6.08		9		4,060	@	10.00
8			2,320	@	6.40		11		1,740	@	11.00
13			3,480	@	6.50		23		3,480	@	11.00
21			2,030	@	6.60		27		2,610	@	12.00
29			1,450	@	6.79				13,340
			15,370

Assuming that periodic inventory records are kept in units only, calculate the average-cost per unit. (Round answer to 2 decimal places, e.g. 2.76.)

Average-cost per unit

$  per unit

eTextbook and Media

  

  

Assuming that periodic inventory records are kept in units only, compute the inventory at April 30 using LIFO and average-cost. (Round answer to 0 decimal places, e.g. 2,760.)

LIFO		$
Average-cost		$

eTextbook and Media

  

  

Assuming that perpetual inventory records are kept in dollars, determine the inventory using (1) FIFO and (2) LIFO. (Round answer to 0 decimal places, e.g. 2,760.)

		(1) FIFO		(2) LIFO
Inventory		$		$

eTextbook and Media

  

  

Compute cost of goods sold assuming periodic inventory procedures and inventory priced at FIFO. (Round answer to 0 decimal places, e.g. 2,760.)

Cost of goods sold

$

eTextbook and Media

  

  

In an inflationary period, which inventory method—FIFO, LIFO, average-cost—will show the highest net income?

Average-costFIFOLIFO inventory method will show the highest net income.

show work and explain

Answer 1

1	Average-cost per unit	$6.35
2	Ending Inventory
	FIFO	$13,674
	LIFO	$12,203
	Average-Cost	$12,891
3	Cost of Goods Sold
	FIFO	$83,926
	LIFO	$85,397
	Average-Cost	$84,709
4	FIFO Method will show the highest net income.
	Periodic inventory method
	Average Cost
	Units	Unit Cost
	1,740	$6.00	$10,440
	4,350	$6.08	$26,448
	2,320	$6.40	$14,848
	3,480	$6.50	$22,620
	2,030	$6.60	$13,398
	1,450	$6.79	$9,846
	15,370		$97,600
	Average cost per unit		$6.35
	Ending Inventory = 2,030 x $6.35	$12,891
	COGS =	Beginning inventory + purchases - ending inventory
	=	$10,440 + 87,160 - 12,891
	=	$84,709
	FIFO
	Units	Unit Cost
	580	$6.60	$3,828
	1,450	$6.79	$9,846
	Ending Inventory		$13,674
	COGS =	Beginning inventory + purchases - ending inventory
	=	$10,440 + 87,160 - 13,674
	=	$83,926
	LIFO
	Units	Unit Cost
	1,740	$6.00	$10,440
	290	$6.08	$1,763
	Ending Inventory		$12,203
	COGS =	Beginning inventory + purchases - ending inventory
	=	$10,440 + 87,160 - 12,203
	=	$85,397