Exercise 6-14A Periodic: Cost flow assumptions LO P3 Lopez Company reported the
ID: 2547430 • Letter: E
Question
Exercise 6-14A Periodic: Cost flow assumptions LO P3 Lopez Company reported the following current-year data for its only product. The company uses a periodic inventory system, and its ending inventory consists of 390 units-130 from each of the last three purchases. Jan. 1 Beginning inventory Mar 7 Purchase uly 28 Purchase Oct. 3 Purchase Dec. 19 Purchase 230 units $3.2-$ 736 5e0 units $3.75- 1,875 1,140 units & $3,704,218 1,028 units $4.604,692 448 units $4.10 1,884 S 13,325 Totals 3,338 units ed to ending inventory and to cost of goods sold for the following (Do not round intermediate calculations und your enswers to 2 decimal places.) Sold b) Weighted average (c) FIFO d) LIFO Which method yields the highest net income? Specific identification OLIFO FIFO o Weighted averageExplanation / Answer
date
description
units
cost
total = units*cost
1-Jan
beginning inventory
230
3.2
736
7-Mar
purchase
500
3.75
1875
28-Jul
purchase
1140
3.7
4218
3-Dec
purchase
1020
4.6
4692
19-Dec
purchase
440
4.1
1804
31-Dec
total
3330
13325
0
Units sold during the year
total units available during the year-units in year end inventory
3330-390
2940
Units in Year end inventory
390
1-
specific identification
cost of year end inventory
date
description
units
cost
total = units*cost
28-Jul
purchase
130
3.7
481
3-Dec
purchase
130
4.6
598
19-Dec
purchase
130
4.1
533
total cost of year end inventory
1612
cost of goods sold
total cost of units available during the year-year end inventory
13325-1612
11713
2-
weighted average cost per unit
total value of units/no of units
13325/3330
4.00
cost of goods sold
no of units sold* weighted average price
2940*4
11760
cost of year end inventory
no of units in year end inventory* weighted average price
390*4
1560
3-
FIFO method
cost of goods sold
date
description
units
cost
total = units*cost
7-Mar
purchase
500
3.75
1875
28-Jul
purchase
1140
3.7
4218
3-Dec
purchase
1020
4.6
4692
19-Dec
purchase
280
4.1
1148
cost of goods sold
2940
11933
cost of year end inventory
19-Dec
purchase
390
4.1
1599
4-
LIFO method
cost of goods sold
date
description
units
cost
total = units*cost
7-Mar
purchase
340
3.75
1275
28-Jul
purchase
1140
3.7
4218
3-Dec
purchase
1020
4.6
4692
19-Dec
purchase
210
4.1
861
cost of goods sold
2940
11046
cost of year end inventory
1-Jan
beginning inventory
230
3.2
736
7-Mar
purchase
160
3.75
600
cost of year end inventory
390
1336
5-
Method
cost of goods sold
specific identification
11713
weighted average
11760
FIFO
11933
LIFO
11046
In this case lifo will result in highest net income because it cost of goods sold is less among all the methods
date
description
units
cost
total = units*cost
1-Jan
beginning inventory
230
3.2
736
7-Mar
purchase
500
3.75
1875
28-Jul
purchase
1140
3.7
4218
3-Dec
purchase
1020
4.6
4692
19-Dec
purchase
440
4.1
1804
31-Dec
total
3330
13325
0
Units sold during the year
total units available during the year-units in year end inventory
3330-390
2940
Units in Year end inventory
390
1-
specific identification
cost of year end inventory
date
description
units
cost
total = units*cost
28-Jul
purchase
130
3.7
481
3-Dec
purchase
130
4.6
598
19-Dec
purchase
130
4.1
533
total cost of year end inventory
1612
cost of goods sold
total cost of units available during the year-year end inventory
13325-1612
11713
2-
weighted average cost per unit
total value of units/no of units
13325/3330
4.00
cost of goods sold
no of units sold* weighted average price
2940*4
11760
cost of year end inventory
no of units in year end inventory* weighted average price
390*4
1560
3-
FIFO method
cost of goods sold
date
description
units
cost
total = units*cost
7-Mar
purchase
500
3.75
1875
28-Jul
purchase
1140
3.7
4218
3-Dec
purchase
1020
4.6
4692
19-Dec
purchase
280
4.1
1148
cost of goods sold
2940
11933
cost of year end inventory
19-Dec
purchase
390
4.1
1599
4-
LIFO method
cost of goods sold
date
description
units
cost
total = units*cost
7-Mar
purchase
340
3.75
1275
28-Jul
purchase
1140
3.7
4218
3-Dec
purchase
1020
4.6
4692
19-Dec
purchase
210
4.1
861
cost of goods sold
2940
11046
cost of year end inventory
1-Jan
beginning inventory
230
3.2
736
7-Mar
purchase
160
3.75
600
cost of year end inventory
390
1336
5-
Method
cost of goods sold
specific identification
11713
weighted average
11760
FIFO
11933
LIFO
11046
In this case lifo will result in highest net income because it cost of goods sold is less among all the methods