**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** | **1,900** | **$5** || **For the current year:** | | || Purchase, March 21 | 5,030 | $7 || Purchase, August 1 | 2,980 | $8 || **Inventory, December 31, current year** | **4,140** | |**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.)*| | FIFO | LIFO | Average Cost ||---------------|------|------|--------------|| Ending inventory | | | || Cost of goods sold | | | |### Explanation of Concepts:#### FIFO (First-In, First-Out)FIFO assumes that the oldest inventory items are sold first. Therefore, the cost of goods sold is based on the cost of the earliest purchased inventory items, while ending inventory is based on the most recent purchases.#### LIFO (Last-In, First-Out)LIFO assumes that the most recently purchased inventory items are sold first. Consequently, the cost of goods sold is based on the cost of the latest purchased inventory items, while ending inventory is based on the oldest inventory items.#### Average CostThe Average Cost method calculates the cost of goods sold and ending inventory based on the average cost of all inventory items available for sale during the period.### Steps to Compute:1. **FIFO Calculation**: - Determine the cost of the ending inventory using the most recent purchases. - Calculate the cost of goods sold using the oldest purchases.2. **LIFO Calculation**: - Determine the cost of the ending inventory using the oldest inventory. - Calculate the cost of goods sold using the most recent purchases.3. **Average Cost Calculation**: - Calculate

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Description: **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

FIFO :- FIRST IN FIRST OUT method in which good procured in earliest are sold . LIFO :- LAST IN…

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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: Purchase, March 21 Purchase, August 1 Inventory, December 31, current year 1,900 $5 5,030 2,980 4,140 7 N 00

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: Purchase, March 21 Purchase, August 1 Inventory, December 31, current year 1,900 $5 5,030 2,980 4,140 7 N 00

FINANCIAL ACCOUNTING

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ISBN:9781259964947

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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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The units of an item available for sale during the year were as follows: Jan 1 Inventory 15 units at 122 April 15 Purchase 140 units at 116 September 9 Purchase 26 units at 122 There are 31 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the inventory cost using the last-in, first-out (LIFO)
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FAD Company uses a periodic inventory system and its inventory records for the period contain the following information: Beginning inventory (170 units @ $69/unit) $11,730 Purchases (245 units @ $69/unit) 16,905 Ending inventory (220 units @ $69/unit) 15,180 What is the amount of cost of goods available for sale?
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