Question

Inventory information for Part 311 of Whispering Corp. discloses the following information for the month of June.

June 1 Balance 304 units @ $13 June 10 Sold 205 units @ $30
11 Purchased 804 units @ $15 15 Sold 504 units @ $32
20 Purchased 498 units @ $16 27 Sold
295 units @ $34

1. Assuming that the periodic inventory method is used, compute the cost of goods sold and ending inventory under (1) LIFO and (2) FIFO.

2. 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?

3. 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?

Answer 1

Answer:

FIFO: ending inventory: $9,528  COGS: $ 14,452

LIFO: ending inventory: $ 8,422 COGS: $ 15,558 (periodic)

LIFO:  ending inventory $ 9,035 COGS ·$ 14,945 (perpetual)

Explanation:

June   1     Balance 304 units @ $13   3, 952

June  11 Purchased 804 units @ $15  12,060

June 20 Purchased 498 units @ $16  7, 968  

Tota units 1,606 Cost available:         23,980

June 10 Sold 205 units @ $30

June 15 Sold 504 units @ $32

June 27 Sold 295 units @ $34

Total units: 1,004 units

Ending Inventory units: 1,606 - 1,004 = 602

FIFO:

first units are sold while last are ending inventory.

As we always pick from chronological order is the same under perpetual or periodic method.

Ending Inventory:     602 units

June 20 Purchased 498 units @ $16   7, 968   (602 - 498 = 104)

June  11 Purchased   104 units @ $15  1, 560    

                      Total:                               9,528

COGS: Difference between cost available and ending inventory:

23,980 - 9,528 = 14,452

LIFO:

first units are part of ending inventory. As the units aren't picked in chronological order the values cahnges under perpetual and periodic method.

periodic ending inventory:

June   1     Balance 304 units @ $13   3, 952 (602 - 304 = 298)

June  11 Purchased 298 units @ $15   4,470  

                               Total                      8,422

COGS: 23,980 - 8,422 = 15,558

perpetual method:

Inventory after 1st sale: 304 - 205 = 99 units at 13

Inventory after 2nd sale.

99 untis at 13

804-504 = 300 units at 15

Inventory after 3rd sale.

99 untis at 13                           1,287

300 units at 15                        4,500

498 - 295 = 203 units at 16   3,248  

ending inventory:                  9,035

COGS: 23,980 - 9,035 = 14,945