LoBianco Company's record of transactions for the month of April was as follows

LoBianco Company's record of transactions for the month of April was as follows.

Purchases Sales
(Balance on hand)
April 1 600 @ $7.43 April 3 500 @ $12.39
4 1,500 @ $7.53 9 1,300 @ $12.39
8 800 @ $7.93 11 600 @ $13.63
13 1,200 @ $8.05 23 1,200 @ $13.63
21 700 @ $8.18 27 900 @ $14.87
29 500 @ $8.41 ______
______ 4,500
5,300

(a) Assuming that periodic inventory records are kept in units only, compute the inventory at April 30 using (1) LIFO and (2) average cost.
(b) Assuming that perpetual inventory records are kept in dollars, determine the inventory using (1) FIFO and (2) LIFO.
(c) Compute cost of goods sold assuming periodic inventory procedures and inventory priced at FIFO.
(d) In an inflationary period, which inventory method–FIFO, LIFO, average cost–will show the highest net income?


Click here for the solution: LoBianco Company's record of transactions for the month of April was as follows

LoBianco Company’s record of transactions for the month of April was as follows

E8-14 (FIFO, LIFO, and Average Cost Determination) LoBianco Company’s record of transactions for the month of April was as follows.

Purchases Sales
April 1 (balance on hand) 600 @ $6.00 April 3 500 @ $10.00
4 1,500 @ 6.08 9 1,300 @ 10.00
8 800 @ 6.40 11 600 @ 11.00
13 1,200 @ 6.50 23 1,200 @ 11.00
21 700 @ 6.60 27 900@ 12.00
29 500 @ 6.79 4,500
5,300

Instructions
(a) Assuming that periodic inventory records are kept, compute the inventory at April 30 using (1) LIFO and (2) average cost.
(b) Assuming that perpetual inventory records are kept in both units and dollars, determine the inventory at April 30 using (1) FIFO and (2) LIFO.
(c) Compute cost of goods sold assuming periodic inventory procedures and inventory priced at FIFO.
(d) In an inflationary period, which inventory method—FIFO, LIFO, average cost—will show the highest net income?

Click here for the solution: LoBianco Company’s record of transactions for the month of April was as follows