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Simple Plan Enterprises uses a periodic inventory system. Its records showed the following: Inventory, December 31, using...

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Accounting

Simple Plan Enterprises uses a periodic inventory system. Itsrecords showed the following:

Inventory, December 31, using FIFO → 44 Units @ $17 = $748
Inventory, December 31, using LIFO → 44 Units @ $13 = $572

Transactions in the Following YearUnitsUnit CostTotal Cost
Purchase, January 95618$1,008
Purchase, January 20106192,014
Sale, January 11 (at $41 per unit)86
Sale, January 27 (at $42 per unit)62

Required:

  1. Compute the number and cost of goods available for sale, thecost of ending inventory, and the cost of goods sold under FIFO andLIFO.
  2. Compute the inventory turnover ratio under the FIFO and LIFOinventory costing methods.
  3. Does the inventory method used make a significant difference inthe inventory turnover ratio?

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Answer & Explanation Solved by verified expert
3.8 Ratings (612 Votes)
1 FIFO Under the FIFO method of inventory valuation units sold consists of the units from beginning inventory and the earliest purchases Ending inventory consists of the units from recent purchases Number of units available for sale Beginning inventory Purchases 44 56 106 206 Cost of goods    See Answer
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