(Compute FIFO, LIFO, Average Cost—Periodic) Presented below is information related to radios for the Couples Company for the month of July.
|
Date |
Transaction |
Units In |
Unit Cost |
Total |
Units Sold |
Selling Price |
Total |
|
1 Jul |
Balance |
100 |
$4.10 |
$410 |
|||
|
6 |
Purchase |
800 |
4.3 |
3,440 |
|||
|
7 |
Sale |
300 |
$7.00 |
$2,100 |
|||
|
10 |
Sale |
300 |
7.3 |
2,190 |
|||
|
12 |
Purchase |
400 |
4.51 |
1,804 |
|||
|
15 |
Sale |
200 |
7.4 |
1,480 |
|||
|
18 |
Purchase |
300 |
4.6 |
1,380 |
|||
|
22 |
Sale |
400 |
7.4 |
2,960 |
|||
|
25 |
Purchase |
500 |
4.58 |
2,290 |
|||
|
30 |
Sale |
200 |
7.5 |
1,500 |
|||
|
Totals |
2,100 |
$9,324 |
1,400 |
$10,230 |
Instructions
(a) Assuming that the periodic inventory method is used, compute the inventory cost at July 31 under each of the following cost flow assumptions.
(1) FIFO.
(2) LIFO.
(3) Weighted average.
(b) Answer the following questions.
(1) Which of the methods used above will yield the lowest figure for gross profit for the income statement? Explain why.
(2) Which of the methods used above will yield the lowest figure for ending inventory for the balance sheet? Explain why.