Answered: LoBianco Company's record of…

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter5: Accounting For Retail Businesses

Section: Chapter Questions

Problem 41E: Cost of goods sold and related items The following data were extracted from the accounting records...

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Question

LoBianco Company's record of transactions for the month of April was as follows.

Purchases		Sales
April 1 (balance on hand)	600 @ $6.00		April 3	500 @ $10.00
4	1,500 @ $6.08		9	1,300 @ $10.00
8	800 @ $6.40		11	600 @ $11.00
13	1,200 @ $6.50		23	1,200 @ $11.00
21	700 @ $6.60		27	900 @ $12.00
29	500 @ $6.79			4,500
	5,300

Assuming that periodic inventory records are kept, compute the inventory at April 30 using (1) FIFO and (2) average-cost.

Assuming that perpetual inventory records are kept in both units and dollars, determine the inventory at April 30 using (1) FIFO and (2) average-cost.

In an inflationary period, which inventory method - FIFO or average-cost - will show the highest net income?

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