Ace Lawn Care Module 3 Mini Practice Problem

In June, Jim decided to open a small retail operation selling bags of fertilizer to the public. He has decided to begin by offering two kinds of fertilizer. Below is the information for the month of June, 2014, for the two types of fertilizer.

Product	Selling Price
Feed All Fertilizer	$27.00
Weed and Feed All Fertilizer	$35.00

Purchase Data

Date	Product	Quantity (Bags)	Price per Bag
6/1/2014	Feed All Fertilizer	10	15.00
6/1/2014	Weed and Feed All Fertilizer	10	20.00
6/11/2014	Feed All Fertilizer	20	15.50
6/15/2014	Weed and Feed All Fertilizer	10	19.50
6/22/2014	Feed All Fertilizer	10	15.75
6/28/2014	Feed All Fertilizer	10	15.50
6/28/2014	Weed and Feed All Fertilizer	10	19.75

All purchases are paid in cash at the time of the purchase and Jim picks up the fertilizer from the distributor, so there is no freight charge.

Sales Data (summarized by week)

Date	Product	Quantity (Bags)
6/9/2014	Feed All Fertilizer	6
6/9/2014	Weed and Feed All Fertilizer	4
6/16/2014	Feed All Fertilizer	12
6/16/2014	Weed and Feed All Fertilizer	5
6/23/2014	Feed All Fertilizer	8
6/23/2014	Weed and Feed All Fertilizer	2
6/30/2014	Feed All Fertilizer	10
6/30/2014	Weed and Feed All Fertilizer	4

All sales are on credit.

In addition to the sales, on 6/20/14, a customer returned one bag of Feed All Fertilizer to Jim for credit on account.

Instructions:

Calculate the Cost of Goods Sold and the Ending Inventory values for the fertilizer products under 1) Average Cost, 2) First-In, First-Out(FIFO), and 3) Last-In, First-Out (LIFO). You will need to calculate ending inventory from the purchase, sale and return data given, you may assume that a physical count confirmed your calculation of the number of units in ending inventory.

Assume that Jim decides to use the FIFO method and compute the lower of cost or market (LCM) value to be reported for the end of June, 2014. Use the last purchase prices for the market value. You only need to calculate cost under the FIFO method for this comparison.

Prepare the Cost of Goods Sold section of the Income Statement.

I need assistance with the LCM & Income Statement. I really appreciate the help.

1) Average Cost Sample of how to ?? out this page using Average Cost COST OF GOODS AVAILABLE FOR SALE Feed All Fertilizer COST OF GOODS AVAILABLE FOR SALE xxxxx Fertilizer Explanation Units Unit Cost Total Cost Unit Cost Total Cost $50.00 $5.10 127 50 5 177.50 Date Date Explanation Units 6V1 615 Purchase 6/29 Purchase 10 25 35 $5.00 20 6/22 6/20 Purchase Purchase Purchase Total $15.75 15.50 $15.45 $310 $150 S155 $772.50 Total 50 ENDING INVENTORY S 177.50 COST OF GOODS SOLD Cost of Goods Avallable for Sale Less Ending Inventory Cost of Goods Sold $5.07 177.50 S 55.77 $ 121.73 ENDING INVENTORY COST OF GOODS SOLD $15.45 $772.50 $231.75 $540.75 S772.50 50 Cost of Goods Avail for Sale Unit Cost Total Cost 11 5 5.07 $55.77 Units Unit Cost Total Co $15.45 $231.75 Less: Ending Inventory 15 Cost of Goods Sold Agood example is located in your e-text (lustra on 6-6) COST OF GOODS AVAILABLE FOR SALE Weed and Feed All Fertilizer Date Explanation Units Purchase Purchase Unit Cost Total Cost 61 6/15 /28 $20 $19.50 $19.75 $198 Total 30 $19.75 $692.60 ENDING INVENTORY COST OF GOODS SOLD 30 Cost of Goods Avail for Sale S592.50 Units Unit Cost Total Cost Less: Ending Invento S19.75$298.25 Cost of Goods Sold $296.26