P6.

2A Determine cost of goods sold and ending inventory using FIFO, LIFO, and average-cost with analy
Mullins Distribution markets CDs of numerous performing artists. At the beginning of March, Mullins had in
beginning inventory 2,500 CDs with a unit cost of $7. During March, Mullins made the following purchases

March 5 2,000 @ $8 March 21 5,000 @ $10

March 13 3,500 @ $9 March 26 2,000 @ $11
During March 12,000 units were sold. Mullins uses a periodic inventory system.

Instructions
(a) Determine the cost of goods available of sale.
(b) Determine (1) the ending inventory and (2) the cost of goods sold under each of the assumed cos
flow methods (FIFO, LIFO, and average-cost). Prove the accuracy of the cost of goods sold unde
FIFO and LIFO methods. (Note: For average-cost, round cost per unit to three decimal places.)
(c ) Which cost flow methods results in (1) the highest inventory amount for the balance sheet and (2)
the highest cost of goods sold for the income statement?
NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a
Enter a textual answer in the cells with "TEXT."

(a) COST OF GOODS AVAILABLE FOR SALE

Date Explanation Units Unit Cost Total Cost
March 1 Beginning inventory 2,500 $7 $17,500
5 Purchase 2,000 8 $16,000
13 Purchase 3,500 9 $31,500
21 Purchase 5,000 10 $50,000
26 Purchase 2,000 11 $22,000
Total 15,000 $137,000

FIFO
(b)(1) Ending Inventory
Date Units Unit Cost Total Cost
March 26 2,000 $11 $22,000
21 1,000 10 $10,000
3,000 $32,000

(b)(2) Cost of Goods Sold

Cost of goods available for sale $137,000
Less: Ending inventory 32,000
Cost of goods sold $105,000

Proof of Cost of Goods Sold

Date Units Unit Cost Total Cost
 March 1 2,500 $7 $17,500
5 2,000 8 $16,000
13 3,500 9 $31,500
21 4,000 10 $40,000
12,000 $105,000

LIFO
(b)(1) Ending Inventory
Date Units Unit Cost Total Cost
March 1 2,500 $7 $17,500
5 500 8 $4,000
3,000 $21,500

(b)(2) Cost of Goods Sold

Cost of goods available for sale $137,000
Less: Ending inventory 21,500
Cost of goods sold $115,500

Proof of Cost of Goods Sold

Date Units Unit Cost Total Cost
March 26 2,000 $11 $22,000
21 5,000 10 $50,000
13 3,500 9 $31,500
5 1,500 8 $12,000
12,000 $115,500

AVERAGE COST
Cost of goods available for sale 137000
Units available for sale 15000
Average cost per unit $9.133

(b)(1) Ending Inventory

Units Unit Cost Total Cost
3,000 $9.133 $27,400

(b)(2) Cost of Goods Sold

Cost of goods available for sale 137000
Less: Ending inventory 109,600
Cost of goods sold $27,400

(c) (1) As shown in (b), FIFO produces the highest inventory amount,
(c) (2) As shown in (b), LIFO produces the highest cost of goods sold,

After you have completed P6.2A, consider the following additional question.
1. Assume that number of units sold changed to 10,000 units. How does this change impact ending
and cost of goods sold under FIFO, LIFO and Average cost?

FIFO
Ending Inventory
Date Units Unit Cost Total Cost
March 26 2,000 $11 $22,000
21 3,000 10 $30,000
5,000 $52,000

Cost of Goods Sold

Cost of goods available for sale $137,000
Less: Ending inventory 52,000
Cost of goods sold $85,000

Proof of Cost of Goods Sold

Date Units Unit Cost Total Cost
March 1 2,500 $7 $17,500
5 2,000 8 $16,000
13 3,500 9 $31,500
21 2,000 10 $20,000
10,000 $85,000

LIFO
Ending Inventory
Date Units Unit Cost Total Cost
March 1 2,500 $7 $17,500
5 2,000 8 $16,000
13 500 9 $4,500
5,000 $38,000

Cost of Goods Sold

Cost of goods available for sale $137,000
Less: Ending inventory 38,000
Cost of goods sold $99,000

Proof of Cost of Goods Sold

 Date Units Unit Cost Total Cost
March 26 2,000 $11 $22,000
21 5,000 10 $50,000
13 3,000 9 $27,000
10,000 $99,000

AVERAGE COST
Cost of goods available for sale 137000
Units available for sale 15000
Average cost per unit $9.133

Ending Inventory
Units Unit Cost Total Cost
5,000 $9.133 $45,667

Cost of Goods Sold

Cost of goods available for sale 137000
Less: Ending inventory 91,333
Cost of goods sold $45,667
rage-cost with analysis
March, Mullins had in
following purchases of CDs.

of the assumed cost

t of goods sold under the
e decimal places.)
alance sheet and (2)

rmula in cells with a "?".

$32,000
 $115,500

ange impact ending inventory

P6.3A Determine cost of goods sold and ending inventory using FIFO, LIFO, and average-cost
in a periodic inventory system and assess financial statement effects.
Vista Company Inc. had a beginning inventory of 100 units of Product RST at a cost of
$8 per unit. During the year, purchases were:

Feb. 20 600 units at $9 Aug 12 400 units at $11

May 5 500 units at $10 Dec 8 100 units at $12
Vista Company uses a periodic inventory system. Sale totaled 1,500 units.

Instructions
(a) Determine the cost of goods available for sale.
(b) Determine the ending inventory and the cost of goods sold under each of the assumed
cost flow methods (FIFO, LIFO, and average-cost). Prove the accuracy of the cost of goods
sold under the FIFO and LIFO methods. (Round average unit cost to three decimal places.)
(c ) Which cost flow method results in the lowest inventory amount for the balance sheet?
The lowest cost of goods sold for the income statement?
NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a
Enter a textual answer in the cells with "TEXT."

(a) COST OF GOODS AVAILABLE FOR SALE

Date Explanation Units Unit Cost Total Cost
Jan 1 Beginning inventory 100 $8 $800
Feb 20 Purchase 600 9 $5,400
May 5 Purchase 500 10 $5,000
Aug 12 Purchase 400 11 $4,400
Dec 8 Purchase 100 12 $1,200
Total 1,700 $16,800

FIFO
(b)(1) Ending Inventory
Date Units Unit Cost Total Cost
Dec 8 100 $12 $1,200
Aug. 12 100 11 $1,100
200 $2,300

(b)(2) Cost of Goods Sold

Cost of goods available for sale $16,800
Less: Ending inventory 2,300
Cost of goods sold $14,500

Proof of Cost of Goods Sold

 Date Units Unit Cost Total Cost
Jan 1 100 $8 $800
Feb 20 600 9 $5,400
May 5 500 10 $5,000
Aug 12 300 11 $3,300
1,500 $14,500

LIFO
(b)(1) Ending Inventory
Date Units Unit Cost Total Cost
Jan 1 100 $8 $800
Feb 20 100 9 $900
200 $1,700

(b)(2) Cost of Goods Sold

Cost of goods available for sale $16,800
Less: Ending inventory 1,700
Cost of goods sold $15,100

Proof of Cost of Goods Sold

Date Units Unit Cost Total Cost
Dec 8 100 $12 $1,200
Aug 12 400 11 $4,400
May 5 500 10 $5,000
Feb 20 500 9 $4,500
1,500 $15,100

AVERAGE COST
Goods available for sale $16,800
Units available for sale 1700
Average cost per unit $9.88

(b)(1) Ending Inventory

Units Unit Cost Total Cost
200 $9.88 $1,976

(b)(2) Cost of Goods Sold

Cost of goods available for sale $16,800
Less: Ending inventory 1,976
Cost of goods sold $14,824
 Proof of Cost of Goods Sold
1500 x $9.88 $14,824

(c) (1) LIFO results in the lowest inventory amount for the balance sheet,
(c) (2) FIFO results in the lowest cost of goods sold for the income statement,

After you have completed P6.3A, consider the additional question.

1. Assume the units sold changed to 1,400 units. Recompute ending inventory and cost of goods sold
under FIFO, LIFO and average cost.

FIFO
Ending Inventory
Date Units Unit Cost Total Cost
Dec 8 100 $12 $1,200
Aug. 12 200 11 $2,200
300 $3,400

Cost of Goods Sold

Cost of goods available for sale $16,800
Less: Ending inventory 3,400
Cost of goods sold $13,400

Proof of Cost of Goods Sold

Date Units Unit Cost Total Cost
Jan 1 100 $8 $800
Feb 20 600 9 $5,400
May 5 500 10 $5,000
Aug 12 200 11 $2,200
1,400 $13,400

LIFO
Ending Inventory
Date Units Unit Cost Total Cost
Jan 1 100 $8 $800
Feb 20 200 9 $1,800
300 $2,600

Cost of Goods Sold

Cost of goods available for sale $16,800
Less: Ending inventory 2,600
Cost of goods sold $14,200

Proof of Cost of Goods Sold

Date Units Unit Cost Total Cost
Dec 8 100 $12 $1,200
Aug 12 400 11 $4,400
May 5 500 10 $5,000
Feb 20 400 9 $3,600
1,400 $14,200

AVERAGE COST
Goods available for sale $16,800
Units available for sale 1700
Average cost per unit $9.88

Ending Inventory
Units Unit Cost Total Cost
300 $9.88 $2,965

Cost of Goods Sold

Cost of goods available for sale $16,800
Less: Ending inventory 2,965
Cost of goods sold $13,835

Proof of Cost of Goods Sold

1400 x $9.88 $13,835
and average-cost

units at $11
units at $12

of the assumed
of the cost of goods
ree decimal places.)
alance sheet?

or a formula in cells with a "?" .

 $1,700
$14,500

ntory and cost of goods sold

P6.3B Determine cost of goods sold and ending inventory using FIFO, LIFO, and average-cost in
a periodic inventory system and assess financial statement effects.
Smythe Company Inc. had a beginning inventory of 200 units of Product ERV at a cost of
$6 per unit. During the year, purchases were:

Jan. 24 800 units at $7 Aug 19 600 units at $9

Apr. 12 400 units at $8 Nov 30 350 units at $10
Smythe Company uses a periodic inventory system. Sale totaled 1,900 units.

Instructions
(a) Determine the cost of goods available for sale.
(b) Determine the ending inventory and the cost of goods sold under each of the assumed
cost flow methods (FIFO, LIFO, and average-cost). Prove the accuracy of the cost of goods
sold under the FIFO and LIFO methods. (Round average unit cost to three decimal places.)
(c ) Which cost flow method results in the lowest inventory amount for the balance sheet?
The lowest cost of goods sold for the income statement?
NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a

(a) COST OF GOODS AVAILABLE FOR SALE

Date Explanation Units Unit Cost Total Cost
Jan. 1 Beginning inventory 200 $6 $1,200
24 Purchase 800 7 $5,600
Apr. 12 Purchase 400 8 $3,200
Aug. 19 Purchase 600 9 $5,400
Nov 30 Purchase 350 10 $3,500
Total 2,350 $18,900

FIFO
(b)(1) Ending Inventory
Date Units Unit Cost Total Cost
Nov 30 350 $10 $3,500
Aug. 19 100 9 $900
450 $4,400

(b)(2) Cost of Goods Sold

Cost of goods available for sale $18,900
Less: Ending inventory 4,400
Cost of goods sold $14,500
 Proof of Cost of Goods Sold
Date Units Unit Cost Total Cost
Jan. 1 200 $6 $1,200
Jan. 24 800 7 $5,600
Apr. 12 400 8 $3,200
Aug. 19 500 9 $4,500
1,900 $14,500

LIFO
(b)(1) Ending Inventory
Date Units Unit Cost Total Cost
Jan. 1 200 $6 $1,200
Jan. 24 250 7 $1,750
450 $2,950

(b)(2) Cost of Goods Sold

Cost of goods available for sale $18,900
Less: Ending inventory 2,950
Cost of goods sold $15,950

Proof of Cost of Goods Sold

Date Units Unit Cost Total Cost
Nov. 30 350 $10 $3,500
Aug. 19 600 9 $5,400
Apr. 12 400 8 $3,200
Jan. 24 550 7 $3,850
1,900 $15,950

AVERAGE COST
Goods available for sale $18,900
Units available for sale 2350
Average cost per unit $8.043

(b)(1) Ending Inventory

Units Unit Cost Total Cost
450 $8.043 $3,619

(b)(2) Cost of Goods Sold

Cost of goods available for sale $18,900
Less: Ending inventory 3,619
Cost of goods sold $15,281
After you have completed P6.3B, consider the additional question.
1. Assume the units sold changed to 2,000 units. Recompute ending inventory and cost of goods s
under FIFO, LIFO and average cost.

FIFO
Ending Inventory
Date Units Unit Cost Total Cost
Nov 30 350 $10 $3,500
350 $3,500

Cost of Goods Sold

Cost of goods available for sale $18,900
Less: Ending inventory 3,500
Cost of goods sold $15,400

Proof of Cost of Goods Sold

Date Units Unit Cost Total Cost
Jan. 1 200 $6 $1,200
Jan. 24 800 7 $5,600
Apr. 12 400 8 $3,200
Aug. 19 600 9 $5,400
2,000 $15,400

LIFO
Ending Inventory
Date Units Unit Cost Total Cost
Jan. 1 200 $6 $1,200
Jan. 24 150 7 $1,050
350 $2,250

Cost of Goods Sold

Cost of goods available for sale $18,900
Less: Ending inventory 2,250
Cost of goods sold $16,650

Proof of Cost of Goods Sold

 Date Units Unit Cost Total Cost
Nov. 30 350 $10 $3,500
Aug. 19 600 9 $5,400
Apr. 12 400 8 $3,200
Jan. 24 650 7 $4,550
2,000 $16,650

AVERAGE COST
Goods available for sale $18,900
Units available for sale 2350
Average cost per unit $8.043

Ending Inventory
Units Unit Cost Total Cost
350 $8.043 $2,815

Cost of Goods Sold

Cost of goods available for sale $18,900
Less: Ending inventory 2,815
Cost of goods sold $16,085
and average-cost in

at a cost of

ch of the assumed
acy of the cost of goods
o three decimal places.)
e balance sheet?

r or a formula in cells with a "?" .

nventory and cost of goods sold