### E7-5 (Algo) Calculating Ending Inventory and Cost of Goods Sold Under FIFO, LIFO, and Average Cost LO7-2**Background Context**Nittany 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:| **Inventory, December 31, prior year** | Units | Unit Cost || ------------------------------------- | ----- | --------- | | Quantity | 1,830 | $5 || **For the current year:** | | || Purchase, March 21 | 5,120 | $7 || Purchase, August 1 | 2,980 | $8 || Inventory, December 31, current year | 4,100 | | #### Required:- Compute ending inventory and cost of goods sold for the current year under FIFO, LIFO, and average cost inventory costing methods.- **Note:** "Average cost per unit" should be rounded to 2 decimal places and final answers should be computed to the nearest whole dollar amount.#### Calculation Table:| | **FIFO** | **LIFO** | **Average Cost** || ------------------- | ---------------- | ---------------- | ----------------- || Ending inventory | | | || Cost of goods sold | | | |### Explanation of Terms:- **FIFO (First-In, First-Out):** An inventory valuation method where the first items placed in inventory are sold first.- **LIFO (Last-In, First-Out):** An inventory valuation method where the last items placed in inventory are sold first.- **Average Cost Method:** An inventory valuation method where the cost of goods available for sale is divided by the total units available to calculate an average unit cost.### Example Detailed Solutions:To complete the table above, follow the steps below for each inventory costing method:#### FIFO Calculation:1. **Ending Inventory:** Determine which units remain at the end of the year, starting with the most recent purchases.2. **Cost of Goods Sold (COGS):** Calculate by using the oldest costs first.#### LIFO Calculation:1. **Ending Inventory:** Determine which units remain at the end of the year, starting with the older purchases.2. **Cost of Goods Sold (CO

The cost of goods sold is the cost of producing the goods, and it consists of direct materials,…

E7-5 (Algo) Calculating Ending Inventory and Cost of Goods Sold Under FIFO, LIFO, and Average Cost LO7-2 Nittany 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: Units Unit Cost Inventory, December 31, prior year For the current year: 1,830 $5 Purchase, March 21 Purchase, August 1 Inventory, December 31, current year 5,120 2,980 4,100 7 Required: Compute ending inventory and cost of goods sold for the current year under FIFO, LIFO, and average cost inventory costing methods. (Round "Average cost per unit" to 2 decimal places and final answers to nearest whole dollar amount.) - 00

E7-5 (Algo) Calculating Ending Inventory and Cost of Goods Sold Under FIFO, LIFO, and Average Cost LO7-2 Nittany 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: Units Unit Cost Inventory, December 31, prior year For the current year: 1,830 $5 Purchase, March 21 Purchase, August 1 Inventory, December 31, current year 5,120 2,980 4,100 7 Required: Compute ending inventory and cost of goods sold for the current year under FIFO, LIFO, and average cost inventory costing methods. (Round "Average cost per unit" to 2 decimal places and final answers to nearest whole dollar amount.) - 00

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Gladstone Company tracks the number of units purchased and sold throughout each accounting period but applies its inventory costing method at the end of each period as if it uses a periodic inventory system. Assume its accounting records provided the following information at the end of the annual accounting period, December 31. Transactions Units Unit Cost Beginning inventory, January 1 3,200 $ 45 Transactions during the year: a. Purchase, January 30 4,550 55 b. Sale, March 14 ($100 each) (2,850 ) c. Purchase, May 1 3,250 75 d. Sale, August 31 ($100 each) (3,300 ) Assuming that for the Specific identification method (item 1d) the March 14 sale was selected two-fifths from the beginning inventory and three-fifths from the purchase of January 30. Assume that the sale of August 31 was selected from the remainder of the beginning inventory, with the balance from the purchase of May 1.
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Po.0014. The units of an item available for sale during the year were as follows: Jan 1 Inventory 27 units at $120 Feb 17 Purchase 54 units at $138 July 21 Purchase 63 units at $156 Nov 23 Purchase 36 units at $165 There are 50 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the inventory cost by (a) FIFO, (b) LIFO and (c) the Average cost method.
E7-5 (Algo) Calculating Ending Inventory and Cost of Goods Sold Under FIFO, LIFO, and Average Cost LO7-2 Nittany 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: Inventory, December 31, prior year For the current year: Purchase, March 21 Purchase, August 1 Inventory, December 31, current year Required: Units Unit Cost 1,810 $ 4 5,180 6 2,880 4,140 7 Compute ending inventory and cost of goods sold for the current year under FIFO, LIFO, and average cost inventory costing methods. Note: Round "Average cost per unit" to 2 decimal places and final answers to nearest whole dollar amount. FIFO LIFO Average Cost Ending inventory $ 27,720 $ 24,550 Cost of goods sold $ 33,979
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E7-16 (Supplement 7A) Calculating Cost of Ending Inventory and Cost of Goods Sold under Perpetual FIFO and LIFO (LO 7-51) Orlon Iron Corp. tracks the number of units purchased and sold throughout each year but applies its inventory costing method ols perpetually at the time of each sale, as if it uses perpetual inventory system. Assume its accounting records provided the following information at the end of the annual accounting period, December 31. Unit Cost $10 Units Transactions e. Inventory, Beginning For the yeari b. Purchase, April 11 C. Purchase, June 1 d. Sale, May 1 (sold for $38 per unit) e. Sale, July ) (sold for $38 per unit) f. Operating expenses (excluding incone tax expense), $19,300 300 700 8 600 11 300 550 Required: Calculate the cost of ending inventory and the cost of goods sold using the FIFO and LIFO methods. FIFO LIFO Cost of Ending Inventory Cost of Goods Sold
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