Question

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

Answer 1

Step-by-step explanation:

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