Waterway Company's record of transactions concerning part X for the month of April was as follows:
|April 1 (Balance on hand)||210 @ $5.20||April 5||410|
|4||510 @ $5.30||12||310|
|11||410 @ $5.51||27||1,020|
|18||310 @ $5.56||28||150|
|26||710 @ $5.82|
|30||310 @ $6.03|
If the perpetual inventory record is kept in dollars, and costs are computed at the time of each withdrawal, what amount would be shown as ending inventory under (1) FIFO, (2) LIFO and (3)Average-cost?
Inventory Valuation Method:
There are three ways that a business can assign value to its inventory, namely: (1) FIFO method, (2) LIFO Method, and (3) weighted-average method. The FIFO method assumes that the business sells first its earliest produced items while the LIFO method assumes the most recently produced items sell first. The weighted-average method, meanwhile, calculates the median cost of all the purchase for a certain period, and that median cost is assigned to the cost of goods sold and the ending inventory.
Answer and Explanation: 1
First, let us plot the necessary information:
|Date (a)||Purchases in Units (b)||Purchase Price (c)||Purchase Cost (d = b x c)|
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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.