Question

Periodic Inventory System and Inventory Costing Methods During its first year of operation, Lux Company purchased 5,600 units of a product at $42 per unit. During the second year, it purchased 6,000 units of the same product at $48 per unit. During the third year, it purchased 5,000 units at $60 per unit. Lux managed to have an ending inventory each year of 1,000 units. The company uses the periodic inventory system. Prepare cost of goods sold statements that compare the value of ending inventory and the cost of goods sold for each of the three years using the FIFO inventory costing method. If an amount is zero, enter "0". Year 1 Year 2 Year 3 Beginning inventory: $ $ $ Purchases: $ $ $ Cost of goods available for sale: $ $ $ Ending inventory: $ $ $ Cost of goods sold: $ $ $ Prepare cost of goods sold statements that compare the value of ending inventory and the cost of goods sold for each of the three years using the LIFO method. If an amount is zero, enter "0". Year 1 Year 2 Year 3 Beginning inventory: $ $ $ Purchases: $ $ $ Cost of goods available for sale: $ $ $ Ending inventory: $ $ $ Cost of goods sold: $ $ $

Answer 1

Computation of COGS and Ending Value of Inventory through FIFO
	Year-1			Year-2			Year-3
	Qty	Rater	Value	Qty	Rate	Value	Qty	Rate	Amount
Opening Inventory	-			1000	$42.00	$42,000.00	1000	$48.00	$48,000.00
Purchase	5600	$42.00	$235,200.00	6000	$48.00	$288,000.00	5000	$60.00	$300,000.00
Cost of Goods Sold	4600	$42.00	$193,200.00	1000	$42.00	$42,000.00	1000	$48.00	$48,000.00
				5000	$48.00	$240,000.00	4000	$60.00	$240,000.00
	4600		$193,200.00	6000		$282,000.00	5000		$288,000.00
Closing Inventory	1000	$42.00	$42,000.00	1000	$48.00	$48,000.00	1000	$60.00	$60,000.00
Computation of COGS and Ending Value of Inventory through LIFO
	Year-1			Year-2			Year-3
	Qty	Rater	Value	Qty	Rate	Value	Qty	Rate	Amount
Opening Inventory	-			1000	$42.00	$42,000.00	1000	$48.00	$48,000.00
Purchase	5600	$42.00	$235,200.00	6000	$48.00	$288,000.00	5000	$60.00	$300,000.00
Cost of Goods Sold	4600	$42.00	$193,200.00	600	$48.00	$28,800.00	5000	$60.00	$300,000.00
Closing Inventory	1000	$42.00	$42,000.00	1000	$42.00	$42,000.00	1000	$48.00	$48,000.00