explain how to calculate the FIFO and LIFO for the below problem and to prepare the income statement for the FIFO, LIFO and Average cost. Problem: Nittany Company uses a

explain how to calculate the FIFO and LIFO for the below problem and to prepare the income statement for the FIFO, LIFO and Average cost. Problem: Nittany Company uses a periodic inventory system. At the end of the annual accounting period, December 31 of the current year, the accounting records provided the following information for product 1: Units Unit Cost Inventory, December 31, prior year 1,990 $ 4 For the current year: Purchase, March 21 5,130 6 Purchase, August 1 2,920 7 Inventory, December 31, current year 4,050 Required: Compute ending inventory and cost of goods sold for the current year under FIFO, LIFO, and average cost inventory costing methods. (Round “Average cost per unit” to 2 decimal places and final answers to nearest whole dollar amount.) My calculations are below. Units Cost Per Unit Total Cost FIFO LIFO Average Cost Beginning inventory 1990 $                 4 $       7,960 $           7,960 $                 7,960 $             7,960 Purchases (March 21) 5130 $                 6 $     30,780 $         30,780 $               30,780 $           30,780 Purchases (August 1) 2920 $                 7 $     20,440 $         20,440 $               20,440 $           20,440 Goods Available for sale 10040 $             5.89 $     59,180 $         59,180 $               59,180 $           59,180 Ending Inventory 4050 $             5.89 $         20,440 $               30,780 $           23,872 Cost of goods Sold 5990 $             5.89 $         38,740 $               28,400 $           35,308 Calculation Avg Costs: Avg Costs = Goods Available for Sale / Number of Units Available for Sale = $59,180/ 10040 = $5.89 = Avg costs * EI = $5.89 * 4050 = $23872 CGS =  Goods Available for Sale – EI = $59180 – $23,872 = $35,308

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