Data for Steward Inc. are presented in P6-13B. Assume that Steward sold product MLN for $40 per unit during the year.

In P6-13B

Steward Inc. had a beginning inventory on January 1 of 400 units of product MLN at a cost of $18 per unit. During the year, purchases were as follows:

Steward uses a periodic inventory system. At the end of the year, a physical inventory count determined that there were 400 units on hand.
Instructions
(a) Prepare a partial income statement through to gross profit for each of the two cost methods: (1) FIFO and (2) average cost.
(b) Show how inventory would be reported in the current assets section of the statement of financial position for (1) FIFO and (2) average cost.
(c) Which cost method results in the higher inventory amount for the statement of financial position? The higher gross profit amount on the income statement?

Transcribed Image Text:

Units Unit Cost Total Cost Feb. 20 ,200 May 5 1,000 Aug. 12 1.200 Dec. 8600 $19 $22,800 21,000 24,000 13,200 20