Homework Week 3 | Complete Solution

Mower-Blower Sales Co. started business on January 20, 2013. Products sold were snow blowers and lawn mowers. Each product sold for $350. Purchases during 2013 were as follows:

Blowers   

Mowers  

  January 21

23

@

$

192        

  February 3

45

@

194        

  February 28

38

@

190        

  March 13

19

@

195        

  April 6

20

@

$

211  

  May 22

50

@

212  

  June 3

41

@

218  

  June 20

62

@

225  

  August 15

19

@

212  

  September 20

20

@

211  

  November 7

16

@

192        

In inventory at December 31, 2013, were 8 blowers and 29 mowers. Assume the company uses a periodic inventory system.

Required 1:

(a)

Compute ending inventory valuation at December 31, 2013 under the FIFO and LIFO cost-flow assumptions. (Hint: Compute ending inventory under each method, and then compare results.)

The following data are available for Sellco for the fiscal year ended on January 31, 2014:

  Sales

840

units

  Beginning inventory

280

units

@

$

4  

  Purchases, in chronological order

300

units

@

$

5  

420

units

@

$

7  

240

units

@

$

8  

Required:

(a)

Calculate cost of goods sold and ending inventory amounts under the cost-flow assumptions, FIFO, LIFO and Weighted average (using a periodic inventory system): (Round your unit cost to 2 decimal places.)

(b)

Assume that net income using the weighted-average cost-flow assumption is $14,400. Calculate net income under FIFO and LIFO. (Round your unit cost to 2 decimal places.)