Question

In: Accounting

Compute ending inventory and cost of goods sold for the current year under FIFO, LIFO, and average cost inventory costing methods.

Penn Company uses a periodic inventory system. At the end of the annual accounting period, December 31 of the current year, the accounting records provided the following information for product 1:

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Required 

Compute ending inventory and cost of goods sold for the current year under FIFO, LIFO, and average cost inventory costing methods.

Solutions

Expert Solution

Units Unit cost Total
Inventory beginning 2000 5 10000
March 21 purchase 5000 6 30000
August 1 purchase 3000 8 24000
Total 10000 64000
Average cost per unit 6.4 =64000/10000
FIFO:
Ending inventory 30000 =(3000*8)+(4000-3000)*6
Cost of goods sold 34000 =64000-30000
LIFO:
Ending inventory 22000 =(2000*5)+(4000-2000)*6
Cost of goods sold 42000 =64000-22000
Average cost:
Ending inventory 25600 =4000*6.4
Cost of goods sold 38400 =64000-25600

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