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The table below shows the beginning inventory, purchase and sale data for T-shirts over the...

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Question

Accounting

The table below shows the beginning inventory, purchase and sale data for T-shirts over the month of April for Gpsum Company. Gpsum maintains a perpetual inventory system and closes its accounts at the end of the year.

Date Description Units Cost

April 3

Opening balance

24

$10

11

Purchases

26

$12

14

Sale

36

21

Purchases

18

$15

25

Sale

20

Required:

Calculate the cost of merchandise sold and ending inventory under the following inventory valuation method. Show all workings!

Ending Cost of Goods Sold Inventory

  1. FIFO (First-In, First-Out) ? ? (3 marks)

  1. LIFO (Last-In, First-Out) ? ? (3 marks)

  1. In a deflationary period, which of the above method gives the highest profit and why.

(2 marks)

A physical count of the T-shirt at April 30 indicated 10 units. Journalize the inventory losses based on LIFO method above. Explanation is not required.

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