Alpha Company uses the periodic inventory system for purchase & sales of merchandise. The value of inventory is based on the periodic system. On January 1, 2016, beginning inventory consisted of 325 units of widgets costing $10 each. Alpha prepares monthly income statements. The following events occurred during the month of Jan.:
|a.||Jan. 3||Purchased on account 350 widgets for $11 each.|
|b.||Jan. 5||Sold on account 425 widgets for $30 each.|
|c.||Jan. 10||Purchased on account 600 widgets for $12 each.|
|d.||Jan. 12||Returned 25 widgets received from Jan. 10 purchase.|
|e.||Jan. 13||Paid for the purchases made on Jan. 3.|
|f.||Jan. 21||Sold on account 550 widgets for $30 each.|
|g.||Jan. 25||Received payment for the sale made on Jan. 5.|
|h.||Jan. 26||Paid for the purchases made on Jan. 10.|
|i.||Jan. 31||Received payment for the sale made on Jan. 21.|
Using the LIFO method, determine the dollar values following for the month of January:
1. Ending Inventory
2. Cost of Goods Available for Sale
3. Cost of Goods Sold
Inventory Cost Assumptions.
The value of the inventory, cost of goods sold, and gross profit in part depend on the assumptions made about the flow of goods in the inventory. Under one assumption, the oldest goods on hand are sold first while under another the last goods received are sold first. Under other assumptions, merchandise sold is specifically identified or sold at random from all ages of inventory.
Answer and Explanation: 1
Requirement a, b, & c:
|Computation under LIFO Method|
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fromChapter 6 / Lesson 11
Inventory valuation methods are ways that companies place a monetary value on the items they have in their inventory. Discover different inventory valuation methods, including specific identification, First-In-First-Out (FIFO), Last-In-First-Out (LIFO), and weighted average.