So sold 5 units of 5 each and 1 unit of 7 each cost

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Unformatted text preview: er FIFO: First Units in were the first units sold. So, sold 5 units of $5 each and 1 unit of $7 each • Cost of goods sold = (5 x $5) + (1 X $7) = $32 • Ending Inventory = 4 units left at $7 each = $28 Under LIFO: Last units in were the first units sold. So, sold 5 units at $7 each and 1 unit at $5 each. • Cost of goods sold = (5 x $7) + (1 x $5) = $40 • Ending inventory = 4 units left at $5 each = $20 Under Weighted Average: • Total cost of inventory was $60/10 units available for sale = $6 per unit • Cost of goods sold = 6 units sold at $6 each = $36 • Ending inventory = 4 units left at $6 each = $24 Income statement under 3 approaches: LIFO: Sales $60 FIFO: Sales $60 • COGS $32 -COGS $40 GP GP $28 $20 WA: Sales $60 -COGS $36 GP $24 In periods of rising prices: • FIFO yields better balance sheet reporting (inventory valued closer to replacement cost because newest inventory is still on balance sheet); could have improper...
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This note was uploaded on 01/22/2014 for the course ACG 2021 taught by Professor Linkovich during the Spring '08 term at University of South Florida - Tampa.

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