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4 October, 16:19

Allocating product cost between cost of goods sold and ending inventory Jones Co. started the year with nno inventory. During the year, it purchased two identical inventory items at different times. The first purchase cost $1,060 and the other $ 1,380. Jones sold one of the itmes during the year.

Based on this information, how much product cost would be allocated to cost of goods sold and ending inventory on the year-end financial statements, assuming use of

A. FIFO?

B. LIFO?

C. Weighted average

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  1. 4 October, 16:27
    0
    The computation of the product cost under each inventory method is shown below:

    A. FIFO

    Cost of goods sold = $1,060

    Ending inventory = $1,380

    B. LIFO

    Cost of goods sold = $1,380

    Ending inventory = $1,060

    C. Weighted average

    Weighted average cost per unit = ($1,060 + $1,380) : 2 = $1,220

    Cost of goods sold = ($1,060 + $1,380) : 2 = $1,220

    Ending inventory = ($1,060 + $1,380) : 2 = $1,220
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