Inventory Valuation Methods Inventory Data – June 1-30 June 1 Inventory 10 units @ $4.00 June 6 Purchase 10 units @ $6.00 June 13 Sale 12 units @ selling price of $10.00 June 20 Purchase 2 units @ $7.50 June 25 Sale 5 units @ selling price of $11.00 Required: Calculate ending inventory, cost of goods sold and gross profit for each inventory method below (assuming a perpetual inventory system): FIFO LIFO Which inventory method provides the highest profit? Which method provides the best income statement matching? Which method provides the better balance sheet valuation? Is a LIFO liquidation occurring?
Inventory Data – June 1-30
June 1 Inventory 10 units @ $4.00
June 6 Purchase 10 units @ $6.00
June 13 Sale 12 units @ selling price of $10.00
June 20 Purchase 2 units @ $7.50
June 25 Sale 5 units @ selling price of $11.00
Required:
Calculate ending inventory, cost of goods sold and gross profit for each inventory method below (assuming a perpetual inventory system):
- FIFO
- LIFO
Which inventory method provides the highest profit? Which method provides the best income statement matching? Which method provides the better
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