P6-3B

Smythe Company Inc. had a beginning inventory of 200 units of Product ERV

at a cost of $6 per unit. During the year, purchases were:

Jan 24

800 units at $7

Aug. 19 600 units at $9

Apr 12

400 units at $8

Nov. 30 350 units at $10

Smythe Company uses a periodic inventory system. Sales totaled 1,900

units.

The cost flow method resulting in the lowest inventory amount on the

balance sheet is on April

12

th

The lowest cost of goods sold was Jan. 24th

Instructions

(a) Determine the cost of goods available for sale.

(b) Determine the ending inventory and the cost of goods sold under each of

the assumed cost

flow methods (FIFO, LIFO, and average-cost). Prove the accuracy of the cost

of goods sold

under the FIFO and LIFO methods. (Round average unit cost to three decimal

places.)

(c) Which cost flow method results in the lowest inventory amount for the

balance sheet?

The lowest cost of goods sold for the income statement?