Q34PGB_4 - Horngren'S Financial And Managerial Accounting

Question

Steel It began January with 55 units of iron inventory that cost \(35 each. During January, the company completed the following inventory transactions:

 

Units Unit Cost Unit Sales Price

Jan. 3 Sale 45 \) 83

8 Purchase 75 $ 52

21 Sale 70 85

30 Purchase 10 55

 

Requirements

4. Determine the company’s cost of goods sold for January using FIFO, LIFO, andweighted-average inventory costing methods.

Step-by-Step Solution

Answer

The COGs under FIFO, LIO, and average cost methods are - $5,045, $5,215, and $5,075, respectively.

Step1: Cost of goods sold

The cost of goods sold is the cost of issuing stock valued under the four methods: FIFO, LIFO, Average cost, and specific identification method. These methods match the issuing stock’s price with the older, most recent, or average cost. 

Step 2: Computed Cost of goods sold under the three methods

The cost of goods sold or each method has been computed in the previous subparts. The list of COGS under the three methods is as follows –

Method	COGS
FIFO	$5,045
LIFO	$5,215
Weighted Average Method	$5,075