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Alternative Inventory Methods Garrett Company has the following transactions during the months of April and May: Date Transaction Units Cost/Unit April 1 Balance 300 17

Alternative Inventory Methods

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

Date Transaction Units Cost/Unit
April 1 Balance 300
17 Purchase 200 $5.10
25 Sale 150
28 Purchase 100 5.70
May 5 Purchase 250 5.10
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 ___________________________ . 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.

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