Sunset Company uses the periodic inventory method and had the following inventory information available:

Units Unit Cost

1/1 Beginning Inventory 200 $6.20

1/20 Purchase 300 $6.50

7/25 Purchase 200 $6.80

10/20 Purchase 300 $7.00

A physical count of inventory on December 31 revealed that there were 150 units on hand. Therefore, 850 units were sold.

Instructions

Answer the following independent questions and show computations supporting your answers.

1. Assume that the company uses the FIFO method. Calculate 1) Costs of Goods Sold and 2) Value of Ending Inventory:

2. Assume that the company uses the average cost method. Calculate 1) Costs of Goods Sold and 2) Value of Ending Inventory:

3. Assume that the company uses the LIFO method. Calculate 1) Costs of Goods Sold and 2) Value of Ending Inventory:

(SHOW ALL YOUR WORK)
HELP PLEASSSEEE

To calculate the costs of goods sold and the value of ending inventory using different inventory costing methods (FIFO, average cost, and LIFO), we need to apply specific formulas and calculations. Let's go through each method step-by-step.

1) FIFO Method:

FIFO stands for "First-In, First-Out". According to this method, the inventory that is purchased first is considered to be sold first.

To calculate the costs of goods sold using FIFO:
a) Determine the cost of the earliest inventory purchases until it is exhausted.
b) Multiply the quantity of units sold by their respective costs.

Starting with the beginning inventory:
200 units x $6.20 = $1,240 (cost of goods sold from the beginning inventory)

Next, we take purchases in chronological order until the quantity sold is met:
300 units x $6.50 = $1,950 (cost of goods sold from the January 20 purchase)
150 units x $6.80 = $1,020 (cost of goods sold from the July 25 purchase)
400 units x $7.00 = $2,800 (cost of goods sold from the October 20 purchase)

Total cost of goods sold (FIFO):
$1,240 + $1,950 + $1,020 + $2,800 = $7,010

To calculate the value of ending inventory using FIFO:
a) Use the remaining units in the last purchase and multiply them by their respective costs.
b) Add the remaining units from the earlier purchases and multiply them by their respective costs.

The remaining inventory from the last purchase:
100 units x $7.00 = $700 (value of ending inventory from the October 20 purchase)

Remaining inventory from the earlier purchases:
100 units x $6.80 = $680 (value of ending inventory from the July 25 purchase)
200 units x $6.50 = $1,300 (value of ending inventory from the January 20 purchase)
50 units x $6.20 = $310 (value of ending inventory from the beginning inventory)

Total value of ending inventory (FIFO):
$700 + $680 + $1,300 + $310 = $2,990

2) Average Cost Method:

To calculate the costs of goods sold using the average cost method:
a) Calculate the weighted average cost per unit.
b) Multiply the weighted average cost per unit by the quantity of units sold.

To calculate the average cost per unit:
Total cost of inventory available = (200 units x $6.20) + (300 units x $6.50) + (200 units x $6.80) + (300 units x $7.00)
= $1,240 + $1,950 + $1,360 + $2,100
= $6,650

Total quantity of inventory available = 200 units + 300 units + 200 units + 300 units
= 1,000 units

Average cost per unit = Total cost of inventory available / Total quantity of inventory available
= $6,650 / 1,000 units
= $6.65

Cost of goods sold using the average cost method = Average cost per unit x Quantity of units sold
= $6.65 x 850 units
= $5,652.50

To calculate the value of ending inventory using the average cost method:
Value of ending inventory = Average cost per unit x Remaining units in inventory
= $6.65 x 150 units
= $997.50

3) LIFO Method:

LIFO stands for "Last-In, First-Out". According to this method, the latest inventory purchases are considered to be sold first.

To calculate the costs of goods sold using LIFO:
a) Determine the cost of the latest inventory purchases until it is exhausted.
b) Multiply the quantity of units sold by their respective costs.

Starting with the most recent purchase:
300 units x $7.00 = $2,100 (cost of goods sold from the October 20 purchase)

Next, we take the purchases in reverse chronological order until the quantity sold is met:
150 units x $6.80 = $1,020 (cost of goods sold from the July 25 purchase)
200 units x $6.50 = $1,300 (cost of goods sold from the January 20 purchase)
200 units x $6.20 = $1,240 (cost of goods sold from the beginning inventory)

Total cost of goods sold (LIFO):
$2,100 + $1,020 + $1,300 + $1,240 = $5,660

To calculate the value of ending inventory using LIFO:
a) Use the remaining units from the first purchase and multiply them by their respective costs.
b) Add the remaining units from the later purchases and multiply them by their respective costs.

The remaining inventory from the first purchase:
50 units x $6.20 = $310 (value of ending inventory from the beginning inventory)

Remaining inventory from the later purchases:
200 units x $6.50 = $1,300 (value of ending inventory from the January 20 purchase)
150 units x $6.80 = $1,020 (value of ending inventory from the July 25 purchase)
100 units x $7.00 = $700 (value of ending inventory from the October 20 purchase)

Total value of ending inventory (LIFO):
$310 + $1,300 + $1,020 + $700 = $3,330

In conclusion:

1) FIFO Method:
- Costs of Goods Sold = $7,010
- Value of Ending Inventory = $2,990

2) Average Cost Method:
- Costs of Goods Sold = $5,652.50
- Value of Ending Inventory = $997.50

3) LIFO Method:
- Costs of Goods Sold = $5,660
- Value of Ending Inventory = $3,330

Remember to double-check the calculations and use the specific method consistently throughout the calculations.