Alternative Inventory Methods

Garrett Company has the following transactions during the months of April and May:

Date	Transaction	Units	Cost/Unit
April 1	Balance	400
17	Purchase	200	$5.50
25	Sale	150
28	Purchase	100	5.75
May 5	Purchase	250	5.50
18	Sale	300
22	Sale	50

The cost of the inventory on April 1 is $5, $4, and $2 per unit, respectively, under the FIFO, average, and LIFO cost flow assumptions.

Required:

1. Compute the inventories at the end of each month and the cost of goods sold for each month for the following alternatives:

1. FIFO periodic

   	Cost of Goods Sold	Ending Inventory
   April	$	$
   May	$	$

2. FIFO perpetual

   	Cost of Goods Sold	Ending Inventory
   April	$	$
   May	$	$

3. LIFO periodic

   	Cost of Goods Sold	Ending Inventory
   April	$	$
   May	$	$

4. LIFO perpetual (Round your intermediate calculations to the nearest cent.)

   	Cost of Goods Sold	Ending Inventory
   April	$	$
   May	$	$

5. Weighted average (Round unit costs to 4 decimal places and final answers to the nearest dollar.)

   	Cost of Goods Sold	Ending Inventory
   April	$	$
   May	$	$

6. Moving average (Round unit costs to 2 decimal places and final answers to nearest dollar.)

   	Cost of Goods Sold	Ending Inventory
   April	$	$
   May	$	$

2. Reconcile the difference between the LIFO periodic and the LIFO perpetual results. If an amount is zero, enter "0".

April	Cost of Goods Sold	Ending Inventory
Difference	$	$
May	Cost of Goods Sold	Ending Inventory
Difference	$	$

3. If Garrett uses IFRS, which of the previous alternatives would be acceptable, and why?

If Garrett Company uses IFRS, it may report its inventory under FIFO, average, or specific identification . It may not use under IFRS because it is not consistent with any presumed physical flow of inventory. Also, is not allowed for tax purposes in most other countries, so there is no tax incentive for a company to use . Note that companies that use IFRS and have rising inventory costs will report a higher income because they include holding gains in income.