The following transactions took place during January 2019 at Ford Inc. The opening inventory consisted of 100 units of Brand X at $10 per unit. The following purchases were made during the month:
|
Units |
Unit cost |
||
|
Jan. |
3 |
200 |
$10 |
|
11 |
400 |
9 |
|
|
19 |
500 |
8 |
|
|
24 |
600 |
7 |
|
|
30 |
200 |
6 |
During the month, 1700 units were sold for $12 each.
Required:
- Calculate the cost of ending inventory and cost of goods sold under each of FIFO/periodic, specific identification/periodic, and weighted average/periodic. For specific identification, assume newest units are sold first.
- Calculate the gross profit under each of the above methods.
- Under what circumstances will the cost of inventory under the specific identification assumption result in a lower net income than the FIFO assumption? in a higher net income than the FIFO assumption?
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