Question: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 $32. A summary of purchases during the current period follows.

UnitsUnit CostCostBeginning Inventory1,000$32$32,000Purchase #11,8003461,200Purchase #28003830,400Purchase #31,2004149,200

During the current period, Chen sold 2,800 units.

(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$Answer

Cost of goods sold$Answer

Use negative signs with answers, when appropriate.

Balance Sheet

TransactionCash Asset+Noncash

Assets

=Liabilities+Contributed

Capital

+Earned

Capital

Record FIFO cost of goods soldAnswer

Answer

Answer

Answer

Answer

Income Statement

Revenue

-

Expenses

=Net

Income

Answer

Answer

Answer

(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$Answer

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Cost of goods sold$Answer