Problem P6-2B

Lifetime Distribution markets classic childrens books. At the beginning of June, Lifetime had in beginning inventory 1,200 books with a unit cost of $3. During June, Life- time made the following purchases of books.

June 3 4,000 @ $3 June 29 4,000 @ $6

June 18 7,500 @ $5

During June, 10,500 books were sold. Lifetime uses a periodic inventory system.

June 29th was the highest cost of goods sold

(a) Determine the Cost of Goods Available for Sale

The cost of goods available for sale is the total recorded cost of beginning finished goods or merchandise inventory in an accounting period, plus the cost of any finished goods produced or merchandise added during the period. Thus, the calculation of the cost of goods available for sale is:

Beginning sellable inventory + Finished goods produced + Merchandise acquired

The cost of any freight needed to acquire merchandise (known as "freight in") is typically considered a part of this cost

Date	Explanation	Units	Unit Cost	Total Cost
June 1	Beginning Inventory	1200	$3	$3600
June 3		4000	$3	$1200
June 18 June 29		7500 4000	$5 $6	$37,500 $24,000
	Total	16,700	$6	$66,300

FIFO

Units Available for Sale= 1200+ 4000 + 7500 + 4000 = 16,700

Units Sold= 10,500

Units in Ending Inventory = 16,700 10,500= 6200

6200 Units ending inventory x Unit cost $6 Total =$37,200 total cost of ending inventory

Total cost of inventory for sale 66,300 minus cost of ending inventory$ =$29,100 cost of inventory sold

(1) Ending Inventory	(2) Cost of Goods Sold
Date	Units	Unit Cost	Total Cost	Cost of goods available for sale	$66,300
	16700	$6	66300	Less: ending inventory	63,000
	6200	6	37200
Total	Amount	$		Cost of Goods Sold	3300

Proof of Cost of Goods Sold (FIFO)
Date	Units	Unit Cost	Total Cost
	Amount	6
	Amount		Amount
	Amount		Amount
	Amount		Amount
Total	Amount	Total	Amount

LIFO

(1) Ending Inventory	(2) Cost of Goods Sold
Date	Units	Unit Cost	Total Cost	Cost of goods available for sale	Amount
	Amount		Amount	Less: ending inventory	Amount
	Amount		Amount
Total	Amount	Total	Amount	Cost of Goods Sold	Amount

Proof of Cost of Goods Sold (LIFO)
Date	Units	Unit Cost	Total Cost
	Amount		Amount
	Amount		Amount
	Amount		Amount
	Amount		Amount
Total	Amount	Total	Amount

AVERAGE COST (Round to the nearest decimal, i.e., $1.01)

(1) Ending Inventory	(2) Cost of Goods Sold
	Units	Unit Cost	Total Cost	Cost of goods available for sale	Amount
	Amount		Amount	Less: ending inventory	Amount
Total	Amount	Total	Amount	Cost of Goods Sold	Amount

(c) Which cost flow method results in (1) the highest inventory amount for the balance sheet and (2) the highest cost of goods sold for the income statement?

Enter your answer here

Problem 6-3B

(a) Determine the Cost of Goods Available for Sale

Date	Explanation	Units	Unit Cost	Total Cost
	Total

(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 each method.

FIFO

(1) Ending Inventory	(2) Cost of Goods Sold
Date	Units	Unit Cost	Total Cost	Cost of goods available for sale	Amount
	Amount		Amount	Less: ending inventory	Amount
	Amount		Amount
Total	Amount	Total	Amount	Cost of Goods Sold	Amount

Proof of Cost of Goods Sold (FIFO)
Date	Units	Unit Cost	Total Cost
	Amount		Amount
	Amount		Amount
	Amount		Amount
	Amount		Amount
Total	Amount	Total	Amount

LIFO

(1) Ending Inventory	(2) Cost of Goods Sold
Date	Units	Unit Cost	Total Cost	Cost of goods available for sale	Amount
	Amount		Amount	Less: ending inventory	Amount
	Amount		Amount
Total	Amount	Total	Amount	Cost of Goods Sold	Amount

Proof of Cost of Goods Sold (LIFO)
Date	Units	Unit Cost	Total Cost
	Amount		Amount
	Amount		Amount
	Amount		Amount
	Amount		Amount
Total	Amount	Total	Amount

AVERAGE COST (Round to the nearest decimal, i.e., $1.01)

(1) Ending Inventory	(2) Cost of Goods Sold
	Units	Unit Cost	Total Cost	Cost of goods available for sale	Amount
	Amount		Amount	Less: ending inventory	Amount
Total	Amount	Total	Amount	Cost of Goods Sold	Amount

(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?

Enter your answer here