Applying and Analyzing Inventory Costing Methods

At the beginning of the current period, Chen carried 1,000 units of its product with a unit cost of $20. A summary of purchases during the current period follows. During the period, Chen sold 2,800 units.

	Units	Unit Cost	Cost
Beginning Inventory	1,000	$ 20	$ 20,000
Purchase #1	1,800	22	39,600
Purchase #2	800	26	20,800
Purchase #3	1,200	29	34,800

(a) Assume that Chen uses the first-in, first-out method. Compute both cost of good sold for the current period and the ending inventory balance. Use the financial statement effects template to record cost of goods sold for the period.

Ending inventory balance $___________

Cost of goods sold $___________

Use negative signs with answers, when appropriate. Balance Sheet Noncash Contributed Earned Transaction Cash AssetAssetsLCapitalCapital Liabilities = + Record FIFO cost of goods solod Income Statement Net Revenue - Expenses = - Income (b) Assume that Chen uses the last-in, first-out method. Compute both cost of good sold for the current period and the ending inventory balance. Ending inventory balance Cost of goods sold (c) Assume that Chen uses the average cost method. Compute both cost of good sold for the current period and the ending inventory balance. Ending inventory balance Cost of goods sold