Determine cost of goods sold and ending inventory using FIFO, LIFO, and average-cost with analysis. (LO 2, 3)
Ziad Company had a beginning inventory on January 1 of 150 units of Product 4-18-15 at a cost of $20 per unit. During the year, the following purchases were made.
| Mar. 15 |
400 units at $23 |
Sept. 4 |
350 units at $26 |
| July 20 |
250 units at $24 |
Dec. 2 |
100 units at $29 |
1,000 units were sold. Ziad Company uses a periodic inventory system.
Instructions
(a) Determine the cost of goods available for sale.
Determine (1) the ending inventory and (2) the cost of goods sold under each of the assumed cost flow methods (FIFO, LIFO, and average-cost). Prove the accuracy of the cost of goods sold under the FIFO and LIFO methods. (b) (2) Cost of goods sold:
| FIFO |
$23,400 |
| LIFO |
$24,900 |
| Average |
$24,160 |
Which cost flow method results in (1) the lowest inventory amount for the balance sheet, and (2) the lowest cost of goods sold for the income statement?