P5.32

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 Cost flow assumptions—FIFO, LIFO, and weighted average using a 
periodic system  The following data are available for Sellco for the fiscal year 
ended on January 31, 2014: 
 UnitsUnit Price$ 
Sales                3,200   
Beginning Inventory                1,000$4.00$4,000 
Purchases -in date order                1,200$5.00$6,000 
                1,600$6.00$9,600 
                    800$8.00$6,400 
 Required: 
 a.  Calculate cost of goods sold and ending inventory under the following cost flow 
assumptions (using a periodic inventory system): 
 1.  FIFO. 
 UnitsUnit Price$$
Beginning Inventory                1,000$4.00 $4,000
Purchases 
                 1,200$5.00$6,000 
                1,600$6.00$9,600
                    800$8.00$6,400$22,000
Available                4,600  $26,000
Ending Inventory (1,000 +3,600 less 3,200) = 1,400  
   
   $0
CGS  
 2.  LIFO
 UnitsUnit Price$$
Beginning Inventory                1,000$4.00 $4,000
Purchases 
                 1,200$5.00$6,000 
                1,600$6.00$9,600
                    800$8.00$6,400$22,000
Available                4,600  $26,000
Ending Inventory (1,000 +3,600 less 3,200) = 1,400  
   
   $0
CGS  
 3.  Weighted average. Round the unit cost answer to two decimal places and 
ending inventory to the nearest $10. 
Beginning Inventory                1,000$4.00 $4,000
Purchases 
                 1,200$5.00$6,000 
                1,600$6.00$9,600
                    800$8.00$6,400$22,000
Available                4,600  $26,000
Weighted Average   
Cost of Goods sold-3,200 units 
Ending Inventory  
 b.  Assume that net income using the weighted-average cost flow assumption is 
$116,000. Calculate net income under FIFO and LIFO. 
Weighted Average proof
Income  
CGS 
Sales value 
FIFO Income
Sales  
CGS 
Net Income 
LIFO Incme
Sales  
CGS 
Net Income 
    • 8 years ago
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