FIFO, LIFO and Average Cost Determination) John Adams Company’s record of transactions for the month of April was as follows.
Purchases
April 1 (balance on hand) 600 @ $6.00
4 1,500 @ 6.08
8 800 @ 6.40
13 1,200 @ 6.50
21 700 @ 6.60
29 500 @ 6.79
5,300
Sales
April 3 500 @ $10.00
9 1,400 @ 10.00
11 600 @ 11.00
23 1,200 @ 11.00
27 900 @ 12.00
4,600
Instructions
1. Assuming that periodic inventory records are kept in units only, compute the inventory at April 30 using (1) LIFO and (2) average cost.
2. Assuming that perpetual inventory records are kept in dollars, determine the inventory using (1) FIFO and (2) LIFO.
3. Compute cost of goods sold assuming periodic inventory procedures and inventory priced at FIFO.
4. In an inflationary period, which inventory method—FIFO, LIFO, average cost—will show the highest net income?
