Question

Mower-Blower Sales Co. started business on January 20, 2019. Products sold were snow blowers and lawn mowers. Each product sold for $350. Purchases during 2019 were as follows: Blowers Mowers January 21 17 @ $ 201 February 3 48 @ 190 February 28 34 @ 188 March 13 16 @ 193 April 6 18 @ $ 214 May 22 45 @ 218 June 3 35 @ 218 June 20 70 @ 225 August 15 19 @ 218 September 20 18 @ 214 November 7 22 @ 201 The December 31, 2019, inventory included 11 blowers and 25 mowers. Assume the company uses a periodic inventory system. Required: a-1. Compute ending inventory valuation at December 31, 2019, under the FIFO and LIFO cost flow assumptions

Answer 1

To compute the ending inventory valuation at December 31, 2019, we can use either the FIFO or LIFO cost flow assumptions. Under FIFO, the ending inventory valuation is $4,293, while under LIFO, it is $10,764.

Step-by-step explanation:

To compute the ending inventory valuation at December 31, 2019, under the FIFO (First-In, First-Out) cost flow assumption, we start with the earliest purchases and work our way to the most recent purchases. The ending inventory valuation is the cost of the remaining inventory at year-end. To compute the ending inventory valuation under the LIFO (Last-In, First-Out) cost flow assumption, we start with the most recent purchases and work our way to the earliest purchases. Again, the ending inventory valuation is the cost of the remaining inventory at year-end.

Using the given information, we can calculate the ending inventory valuation:

1. Under FIFO: (11 blowers * $201 per blower) + (25 mowers * $201 per mower) = $4,293
2. Under LIFO: (11 blowers * $218 per blower) + (25 mowers * $214 per mower) = $10,764

Answer 2

LIFO (last-in, first-out)= $191

FIFO (first-in, first-out)= 240.45

Step-by-step explanation:

Giving the following information:

Purchases during 2019 were as follows:

January:

21 + 17= 38 units

Unitary cost= 201/38= 5.30

September

20+18=38

214/38= 5.64

November

201/29= 6.93

December 31, 2019, inventory included 11 blowers and 25 mowers.

Total inventory= 36 units

LIFO (last-in, first-out):

36*5.30= $191

FIFO (first-in, first-out)

29*6.93 + 7*5.64= 240.45