Problem 6-6A (Part Level Submission) You are provided with the following informa
ID: 2566413 • Letter: P
Question
Problem 6-6A (Part Level Submission) You are provided with the following information for Barton Inc. Barton Inc. uses the periodic method of accounting for its inventory transactions. March 1 Beginning inventory 2,005 liters at a cost of 58¢ per liter March 3 Purchased 2,495 liters at a cost of 61¢ per liter March 5 Sold 2,225 liters for$1.06 per liter March 10 Purchased 4,020 liters at a cost of 67¢ per liter. March 20 Purchased 2,500 liters at a cost of 71 per liter March 30 Sold 5,280 liters for $1.32 per liter. (a1) Your answer is incorrect. Try again. Calculate the value of ending inventory that would be reported on the balance sheet, under each of the following cost flow methods. (Round answers to o decimal places, e.g. 1250.) (1) Specific identification method assuming: (i) The March 5 sale consisted of 1,000 liters from the March 1 beginning inventory and 1,225 liters from the March 3 purchase; and (ii) The March 30 sale consisted of the following number of units sold from beginning inventory and each purchase: 495 liters from March 1; 510 liters from March 3; 2,930 liters from March 10; and 1,345 liters from March 20. (2) FIFO (3) LIFO Ending inventory Specific identification FIFO IFOExplanation / Answer
Solution:
Ending Inventory (Specific Identification Method) = $2,310
Ending Inventory (FIFO Method) = $2,455
Ending Inventory (LIFO Method) = $2,084
Here is the working..
Periodic Inventory System
It is a system of inventory in which inventories are updated on a periodic basis. Periodic basis may be monthly, quarterly, weekly, half yearly or yearly. In this system, inventories are not kept up to date.
a-1) Specific Identification Method
Specific Identification (Periodic)
Units
$/Unit
$$
Beginning Inventory March 1
2005
$0.58
$1,163
Purchases
March.3
2495
$0.61
$1,522
March.10
4020
$0.67
$2,693
March.20
2500
$0.71
$1,775
Goods Available for Sale (A)
11020
$7,153
Cost of Goods Sold:
Units Sold from Beginning Inventory
1495
$0.58
$867
Units Sold from Purchases March.3
1735
$0.61
$1,058
Units Sold from Purchases March.10
2930
$0.67
$1,963
Units Sold from Purchases March.20
1345
$0.71
$955
Total Cost of Goods Sold (B)
7505
$4,844
Ending Inventory (A - B)
3515
$2,310
a-2) First in First Out (FIFO)
FIFO method says the oldest units are sold first.
FIFO (Periodic)
Units
$/Unit
$$
Beginning Inventory March 1
2005
$0.58
$1,163
Purchases
March.3
2495
$0.61
$1,522
March.10
4020
$0.67
$2,693
March.20
2500
$0.71
$1,775
Goods Available for Sale (A)
11020
$7,153
Cost of Goods Sold:
Units Sold from Beginning Inventory
2005
$0.58
$1,163
Units Sold from Purchases March.3
2495
$0.61
$1,522
Units Sold from Purchases March.10
3005
$0.67
$2,013
Units Sold from Purchases March.20
0
$0.71
$0
Total Cost of Goods Sold (B)
7505
$4,698
Ending Inventory (A - B)
3515
$2,455
a-3) Last in First Out (LIFO)
LIFO method says the earliest purchased units are issued or sold first.
LIFO (Periodic)
Units
$/Unit
$$
Beginning Inventory March 1
2005
$0.58
$1,163
Purchases
March.3
2495
$0.61
$1,522
March.10
4020
$0.67
$2,693
March.20
2500
$0.71
$1,775
Goods Available for Sale (A)
11020
$7,153
Cost of Goods Sold:
Units Sold from Beginning Inventory
0
$0.58
$0
Units Sold from Purchases March.3
985
$0.61
$601
Units Sold from Purchases March.10
4020
$0.67
$2,693
Units Sold from Purchases March.20
2500
$0.71
$1,775
Total Cost of Goods Sold (B)
7505
$5,069
Ending Inventory (A - B)
3515
$2,084
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Specific Identification (Periodic)
Units
$/Unit
$$
Beginning Inventory March 1
2005
$0.58
$1,163
Purchases
March.3
2495
$0.61
$1,522
March.10
4020
$0.67
$2,693
March.20
2500
$0.71
$1,775
Goods Available for Sale (A)
11020
$7,153
Cost of Goods Sold:
Units Sold from Beginning Inventory
1495
$0.58
$867
Units Sold from Purchases March.3
1735
$0.61
$1,058
Units Sold from Purchases March.10
2930
$0.67
$1,963
Units Sold from Purchases March.20
1345
$0.71
$955
Total Cost of Goods Sold (B)
7505
$4,844
Ending Inventory (A - B)
3515
$2,310