Answered: FIFO LIFO AVERAGE-COST The ending…

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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Problem 6-3A

Larkspur, Inc. had a beginning inventory on January 1 of 128 units of Product 4-18-15 at a cost of $20 per unit. During the year, the following purchases were made.

Mar. 15

340 units

$23

Sept. 4

298 units

$26

July 20

213 units

$24

Dec. 2

85 units

$29

850 units were sold. Larkspur, Inc. uses a periodic inventory system.

Determine the cost of goods available for sale.

The cost of goods available for sale

Calculate average cost per unit. (Round answer to 2 decimal places, e.g. 2.23.)

Average cost per unit

Determine (1) the ending inventory, and (2) the cost of goods sold under each of the assumed cost flow methods (FIFO, LIFO, and average-cost). Prove the accuracy of the cost of goods sold under the FIFO and LIFO methods. (Round answers to 0 decimal places, e.g. 1,250.)

	FIFO	LIFO	AVERAGE-COST
The ending inventory	$	$	$
The cost of goods sold	$	$	$

(1)		FIFOLIFOAverage-cost results in the highest inventory amount, $ .
(2)		FIFOLIFOAverage-cost produces the highest cost of goods sold, $ .

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