Suppose Company X purchases inventory as follows: (Rising prices or inflationary

trend). Its beginning inventory is 25 units which were purchased for $500.

Units Cost/unit Total cost

January 15 100 units @$22 = $ 2200

March 15 100 units @22.40 = 2240

June 15 100 units @22.80 = 2280

December 15 100 units @23.20 = 2320

Total 400 units $ 9040

At year end, an inventory count reveals 40 units in its ending inventory.

Calculate the cost of goods sold and ending inventory under the following three methods of

accounting (FIFO, LIFO and weighted average):

FIFO LIFO Weighted average

Beginning inventory

+ Purchases

Total available for sale

Less Ending Inventory

Cost of Goods Sold

Which method presented here will result in the highest: A-net income? B- Cash amount? Why?

C-what is the LIFO reserve amount?