Alternative Inventory Methods
Response to the following problem:
The Garrett Company has the following transactions during the months of April and May:
|
Date
|
Transaction
|
Units
|
Cost/Unit
|
|
April 1
|
Balance
|
400
|
|
|
17
|
Purchase
|
200
|
$5.50
|
|
25
|
Sale
|
150
|
|
|
28
|
Purchase
|
100
|
5.75
|
|
May 5
|
Purchase
|
250
|
5.50
|
|
18
|
Sale
|
300
|
|
|
22
|
Sale
|
50
|
|
The cost of the inventory on April 1 is $5, $4, and $2 per unit, respectively, under the FIFO, average, and LIFO cost flow assumptions.
Required
1. Compute the costs of goods sold for each month and the inventories at the end of each month for the following alternatives:
a. FIFO periodic
b. FIFO perpetual
c. LIFO periodic
d. LIFO perpetual
e. Weighted average (round unit costs to 2 decimal places)
f. Moving average (round unit costs to 2 decimal places)
2. Reconcile the difference between the LIFO periodic and the LIFO perpetual results.
3. If Garrett Company uses IFRS, which of the previous alternatives would be acceptable, and why?