Chapter 8, Problem 11E

To determine

Introduction: FIFO stands for first in first out, which means the inventory, which is purchased first, is the first one to be issued for production or is sold first.

LIFO stands for last in first out, which means inventory, which is acquired last, is the first one to be issued for production or to be sold.

The average cost method is based on average cost of goods available for sale. It is calculated by dividing cost of goods available for sale by total number of units available for sale.

Given: Transactions of JA Company for the month of April is presented in the question.

To compute:

• (a)

To compute the inventory on April 30, using (1) LIFO and (2) average-cost, assuming that periodic inventory records are kept in units only.

To determine

• (b)

To determine the inventory using (1) FIFO and (2) LIFO, assuming that perpetual inventory records are kept in dollars.

To determine

• (c)

To determine the cost of goods sold.

To determine

• (d)

To determine an inflationary period, which inventory method yields high net income.