Simple Plan Enterprises uses a periodic inventory system. Its records showed the following:Inventory, December 31, using FIFO → 56 Units @ $23 = $1,288Inventory, December 31, using LIFO → 56 Units @ $19 = $1,064 Transactions in the Following YearUnitsUnit CostTotal CostPurchase, January 96824$ 1,632Purchase, January 20118252,950Sale, January 11 (at $47 per unit)98 Sale, January 27 (at $48 per unit)74 Required:Compute the number and cost of goods available for sale, the cost of ending inventory, and the cost of goods sold under FIFO and LIFO.Compute the inventory turnover ratio under the FIFO and LIFO inventory costing methods.Does the inventory method used make a significant difference in the inventory turnover ratio?

Inventory turnover ratio=Cost of Goods Available for SaleAverage Inventory

Answered: Simple Plan Enterprises uses a periodic…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter6: Cost Of Goods Sold And Inventory

Section: Chapter Questions

Problem 50E: Inventory Costing Methods Crandall Distributors uses a perpetual inventory system and has the...

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Question

Simple Plan Enterprises uses a periodic inventory system. Its records showed the following:

Inventory, December 31, using FIFO → 56 Units @ $23 = $1,288
Inventory, December 31, using LIFO → 56 Units @ $19 = $1,064

Transactions in the Following Year	Units	Unit Cost	Total Cost
Purchase, January 9	68	24	$ 1,632
Purchase, January 20	118	25	2,950
Sale, January 11 (at $47 per unit)	98
Sale, January 27 (at $48 per unit)	74

Required:

Compute the number and cost of goods available for sale, the cost of ending inventory, and the cost of goods sold under FIFO and LIFO.
Compute the inventory turnover ratio under the FIFO and LIFO inventory costing methods.
Does the inventory method used make a significant difference in the inventory turnover ratio?

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