Exercise #3

Compute inventory and cost of goods sold using FIFO and LIFO.

Ella Company reports the following for the month of June and uses the periodic inventory method.

		Units	Unit Cost	Total Cost
June 1	Inventory	200	$5	$1,000
12	Purchase	300	?6	?1,800
23	Purchase	500	?7	?3,500
30	Inventory	160

Instructions

(a)	Compute the cost of the ending inventory and the cost of goods sold under (1) FIFO and (2) LIFO and (3) average cost.
(b)	Which costing method gives the higher ending inventory? Why?

(c)	Which method results in the higher cost of goods sold? Why?