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    airsolow's Avatar
    airsolow Posts: 1, Reputation: 1
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    #1

    Oct 12, 2011, 05:55 PM
    Accounting principles 1 QUESTION!
    Eddings Company had a beginning inventory of 400 units of Product XNA at a cost of $8.00 per unit. During the year, purchases were:
    Feb. 20 600 units @ $9 Aug. 12 300 units @ $11
    May 5 500 units @ $10 Dec. 8 200 units @ $12

    Eddings Company uses a periodic inventory system. Sales totaled 1,500 units.

    Determine the cost of goods available for sale.
    $

    Determine (1) the ending inventory, and (2) the cost of goods sold under each of the assumed cost flow methods (FIFO, LIFO, and average).
    FIFO LIFO Average Cost
    Ending Inventory $ $ $
    Cost of Goods Sold $ $ $


    Which cost flow method results in (1) the lowest inventory amount for the balance sheet, and (2) the lowest cost of goods sold for the income statement?
    Lowest inventory amount

    Lowest cost of goods sold
    Unknown008's Avatar
    Unknown008 Posts: 8,076, Reputation: 723
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    #2

    Oct 13, 2011, 01:12 AM
    The periodic inventory system means that you count them once every transaction have been completed.

    Under FIFO (First In First Out), you will have a total of (400+600+500+300+200-1500=) 500 units.

    Account those 500 units as the last units that you bought (since the first ones are considered to have been sold).

    Can you find the value of that amount?
    (That is 200 units from Dec @ $12 and 300 units from Aug @ $11)

    LIFO is the opposite, in that you account the 500 units as the first units what were in the 'store', which would mean 400 units from the opening inventory and 100 units from the Feb purchase.

    Average simply requires you to find the average price of a unit (total units/total cost) and then you find the cost of 500 units.

    From the results, the other parts would be easier to work out.
    nikar's Avatar
    nikar Posts: 2, Reputation: 1
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    #3

    Jan 3, 2012, 12:02 PM
    Eddings Company had a beginning inventory of 400 units of product XNA at a cost of $8 per
    Unit. During the year, purchases were :
    20-Feb 600 units at $9 12-Aug 300 units at $11
    05-Mar 500 units at $10 08-Dec 200 units at $12
    Eddings Company uses a periodic inventory system. Sales totaled 1.500 units.
    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). Prove the accuracy of the cost of goods sold
    Under the FIFO and LIFO methods.
    c) Which cost flow method results in (1) the lowest inventory amount for the balance sheet,
    And (2) the lowest cost of goods sold for the income statement ?
    nikar's Avatar
    nikar Posts: 2, Reputation: 1
    New Member
    		  
    #4

    Jan 3, 2012, 12:03 PM
    Eddings Company had a beginning inventory of 400 units of product XNA at a cost of $8 per
    Unit. During the year, purchases were :
    20-Feb 600 units at $9 12-Aug 300 units at $11
    05-Mar 500 units at $10 08-Dec 200 units at $12
    Eddings Company uses a periodic inventory system. Sales totaled 1.500 units.
    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). Prove the accuracy of the cost of goods sold
    Under the FIFO and LIFO methods.
    c) Which cost flow method results in (1) the lowest inventory amount for the balance sheet,
    And (2) the lowest cost of goods sold for the income statement ?
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