Chapter 6: Q34PGB_4 (page 370)

Steel It began January with 55 units of iron inventory that cost $35 each. During January, the company completed the following inventory transactions:
Units Unit Cost Unit Sales Price
Jan. 3 Sale 45 $ 83
8 Purchase 75 $ 52
21 Sale 70 85
30 Purchase 10 55
Requirements
4. Determine the company’s cost of goods sold for January using FIFO, LIFO, andweighted-average inventory costing methods.

Short Answer

Expert verified

The COGs under FIFO, LIO, and average cost methods are - $5,045, $5,215, and $5,075, respectively.

Step by step solution

Cost of goods sold

The cost of goods sold is the cost of issuing stock valued under the four methods: FIFO, LIFO, Average cost, and specific identification method. These methods match the issuing stock’s price with the older, most recent, or average cost.

Computed Cost of goods sold under the three methods

The cost of goods sold or each method has been computed in the previous subparts. The list of COGS under the three methods is as follows –

Method	COGS

FIFO	$5,045
LIFO	$5,215
Weighted Average Method	$5,075

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NATURE FOODS GROCERY
Income Statements
Years Ended June 30, 2019 and 2018
	2019	2018
Net Sales Revenue	\( 134,000	\) 119,000
Cost of Goods Sold:
Beginning Merchandise Inventory	\(17,000	\)14,000
Net Cost of Purchases	78,000	67,000
Cost of Goods Available for Sale	95,000	81,000
Less: Ending Merchandise Inventory	18,000	17,000
Cost of Goods Sold	77,000	64,000
Gross Profit	57,000	55,000
Operating Expenses	26,000	21,000
Net Income	\( 31,000	\) 34,000

Short Answer

Step by step solution

Cost of goods sold

Computed Cost of goods sold under the three methods

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