Applying and Analyzing Inventory Costing Methods
At the beginning of the current period, Chen carried 1,000 units ofits product with a unit cost of $32. A summary of purchases duringthe current period follows.
UnitsUnit CostCostBeginning Inventory1,000$32$32,000Purchase#11,8003461,200Purchase #28003830,400Purchase #31,2004149,200
During the current period, Chen sold 2,800 units.
(a) Assume that Chen uses the first-in, first-out method.Compute both cost of good sold for the current period and theending inventory balance. Use the financial statement effectstemplate to record cost of goods sold for the period.
Ending inventory balance $Answer
Cost of goodssold $Answer
Use negative signs with answers, when appropriate.
| Balance Sheet |
|---|
| Transaction | Cash Asset | + | Noncash Assets | = | Liabilities | + | Contributed Capital | + | Earned Capital | |
|---|
| Record FIFO cost of goods sold | | | | | | | | | | |
Income Statement |
|---|
Revenue |
- |
Expenses |
= | Net Income |
|---|
| | | | |
(b) Assume that Chen uses the last-in, first-out method. Computeboth cost of good sold for the current period and the endinginventory balance.
Ending inventory balance $Answer
Cost of goodssold $Answer
(c) Assume that Chen uses the average cost method. Compute bothcost of good sold for the current period and the ending inventorybalance.
Ending inventory balance $Answer
Cost of goodssold $Answer
