Problem:
Milokimball Company had a beginning inventory on January 1 of 100 units of Product WD-44 at a cost of $21 per unit. During the year, the following purchases were made.
Mar 15 300 units at $24 Sept 4 300 units at $28
July 20 200 units at $25 Dec 2 100 units at $30
700 units were sold. Milokimball Company uses a periodic inventory system.
Instructions:
(a) Determine the cost of goods available for sale
(b) 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.
Cost of goods sold
FIFO $17,100
LIFO $18,800
Average $17,990
(c) Which cost flow method results in (1) the highest inventory amount for the balance sheet, and (2) the highest cost of goods sold for the income statement?