Question

the following data are for the evans company, which sells just one product: units unit cost beginning inventory january 1 200 $10 purchases: february 11 500 $14 may 18 400 $16 october 23 100 $20 sales march 1 400 july 1 400 calculate the value of ending inventory and cost of goods sold using the periodic method and (a) first-in, first-out and (b) last-in, first-out.

Answer 1

To calculate the value of ending inventory and cost of goods sold, we can use the periodic method and either the FIFO or LIFO method. For FIFO, the value of ending inventory is $4,600 and the cost of goods sold is $4,000. For LIFO, the value of ending inventory is $6,200 and the cost of goods sold is $8,000.

To calculate the value of ending inventory and cost of goods sold using the periodic method and first-in, first-out (FIFO) or last-in, first-out (LIFO) method, we need to calculate the cost of goods purchased and track the quantity of goods sold. Let's start with FIFO:

Calculate the cost of goods purchased: Beginning inventory + Purchases = $2,000 + $6,600 = $8,600.

Calculate the cost of goods sold: Multiply the number of units sold by their respective unit costs. In this case, 400 units were sold on March 1, costing $10 per unit. Cost of goods sold = 400 * $10 = $4,000.

Calculate the value of ending inventory: Subtract the cost of goods sold from the cost of goods purchased. Ending inventory = Cost of goods purchased - Cost of goods sold = $8,600 - $4,000 = $4,600.

Now let's calculate with LIFO:

Calculate the cost of goods purchased: Beginning inventory + Purchases = $2,000 + $12,200 = $14,200.

Calculate the cost of goods sold: Multiply the number of units sold by their respective unit costs. In this case, 400 units were sold on July 1, costing $20 per unit. Cost of goods sold = 400 * $20 = $8,000.

Calculate the value of ending inventory: Subtract the cost of goods sold from the cost of goods purchased. Ending inventory = Cost of goods purchased - Cost of goods sold = $14,200 - $8,000 = $6,200.