(Compute FIFO, LIFO, Average-Cost-Periodic) Presented below is information related to Blowfish radios for the Hootie Company for the month of July.
Units Unit Units Selling
Date Transaction In Cost Total Sold Price Total
July 1 Balance 100 $4.10 $ 410
6 Purchase 800 4.20 3,360
7 Sale 300 $7.00 $ 2,100
10 Sale 300 7.30 2,190
12 Purchase 400 4.50 1,800
15 Sale 200 7.40 1,480
18 Purchase 300 4.60 1,380
22 Sale 400 7.40 2,960
25 Purchase 500 4.58 2,290
30 Sale 200 7.50 1,500
Totals 2,100 $9,240 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.