E8-13B (FIFO and LIFO—Periodic and Perpetual) Inventory information for Part 311 of Bonds Corp.

E8-13B (FIFO and LIFO—Periodic and Perpetual) Inventory information for Part 311 of Bonds Corp.

discloses the following information for the month of June.

June 1 Balance                     450 units @ $1                 June 10 Sold                300 units @ $2.40

         11 Purchased              1,200 units @ $2                         15 Sold                750 units @ $2.50

          20 Purchased              750 units @ $3                            27 Sold               450 units @ $2.70

Instructions

(a) Assuming that the periodic inventory method is used, compute the cost of goods sold and ending

inventory under (1) LIFO and (2) FIFO.

(b) Assuming that the perpetual inventory method is used and costs are computed at the time of each

withdrawal, what is the value of the ending inventory at LIFO?

(c) Assuming that the perpetual inventory method is used and costs are computed at the time of each

withdrawal, what is the gross profit if the inventory is valued at FIFO?

(d) Why is it stated that FIFO usually produces a higher gross profit than LIFO?