1. Compute the inventories at the end of each month and the cost of goods sold for each month for the following alternatives: FIFO periodic Cost of Goods Sold Ending Inventory April $ $ May $ $ FIFO perpetual Cost of Goods Sold Ending Inventory April $ $ May $ $ LIFO periodic Cost of Goods Sold Ending Inventory April $ $ May $ $
Alternative Inventory Methods
Garrett Company has the following transactions during the months of April and May:
| Date | Transaction | Units | Cost/Unit |
| April 1 | Balance | 300 | |
| 17 | Purchase | 200 | $5.40 |
| 25 | Sale | 150 | |
| 28 | Purchase | 100 | 5.80 |
| May 5 | Purchase | 250 | 5.40 |
| 18 | Sale | 300 | |
| 22 | Sale | 50 |
The cost of the inventory on April 1 is $5, $4, and $2 per unit, respectively, under the FIFO, average, and LIFO cost flow assumptions.
Required:
1. Compute the inventories at the end of each month and the cost of goods sold for each month for the following alternatives:
- FIFO periodic
Cost of Goods Sold Ending Inventory April $ $ May $ $ - FIFO perpetual
Cost of Goods Sold Ending Inventory April $ $ May $ $ - LIFO periodic
Cost of Goods Sold Ending Inventory April $ $ May $ $ - LIFO perpetual (Round your intermediate calculations to the nearest cent.)
Cost of Goods Sold Ending Inventory April $ $ May $ $ - Weighted average (Round unit costs to 4 decimal places and final answers to the nearest dollar.)
Cost of Goods Sold Ending Inventory April $ $ May $ $ - Moving average (Round unit costs to 2 decimal places and final answers to nearest dollar.)
Cost of Goods Sold Ending Inventory April $ $ May $ $
2. Reconcile the difference between the LIFO periodic and the LIFO perpetual results. If an amount is zero, enter "0".
| April | Cost of Goods Sold | Ending Inventory |
| Difference | $ | $ |
| May | Cost of Goods Sold | Ending Inventory |
| Difference | $ | $ |
3. If Garrett uses IFRS, which of the previous alternatives would be acceptable, and why?
If Garrett Company uses IFRS, it may report its inventory under . It may not use under IFRS because it is not consistent with any presumed physical flow of inventory. Also, is not allowed for tax purposes in most other countries, so there is no tax incentive for a company to use . Note that companies that use IFRS and have rising inventory costs will report a higher income because they include holding gains in income.
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