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MATH

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Jones Company had 100 units in beginning inventory at a total cost of $10,000.The company
purchased 200 units at a total cost of $26,000. At the end of the year, Jones had 80 units in ending inventory.

Compute the cost of the ending inventory and the cost of goods sold under (1) FIFO, (2)
LIFO, and (3) average-cost.

  • MATH -

    Since this is year-end, it will be assumed to be a periodic inventory system, so the exact date on which the goods were sold is not important.

    (1) FIFO
    Under FIFO (first in-first out), goods are assumed to be sold in order of purchase, so is the cost.
    Purchases during the period:
    100 units at $100 = $10,000
    200 units at $130 = $26,000

    Units sold during the period = 220
    Cost of units sold
    =100*$100+120*130=$25,600
    Value of ending inventory
    =10,000+26,000-25,600
    =$10,400

    (2) LIFO
    Under LIFO (last in-first out), goods purchased last is sold first.
    Purchases during the period:
    100 units at $100 = $10,000
    200 units at $130 = $26,000

    Units sold during the period = 220
    Cost of units sold
    =20*$100+200*130=$28,000
    Value of ending inventory
    =10,000+26,000-28,000
    =$8,000

    (3) average-cost
    Under average-cost, cost of goods is averaged over the period and the cost applies to the whole period.
    Purchases during the period:
    100 units at $100 = $10,000
    200 units at $130 = $26,000
    average cost per unit
    =(10,000+26,000)/300
    =$120 per unit

    Units sold during the period = 220
    Cost of units sold
    =220 * $120
    =$26,400
    Value of ending inventory
    =36,000-26,400
    =$9,600

  • Accounting -

    Lisa Company had 100 units in beginning inventory at a total cost of $10,000. The company purchased 200 units at a total cost of $26,000. At the end of the year, Lisa had 80 units in ending inventory.

  • accounting -

    Lisa Company had 100 units in beginning inventory at a total cost of $10,000. The company purchased 200 units at a total cost of $26,000. At the end of the year, Lisa had 80 units in ending inventory.

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