Answer: Please refer to the explanation section
Explanation:
1 June Inventory Balance = 556 x $6 = $3336
12 June Purchase = 1112 x $7 = $7784
23 Purchase = 834 x $11 = $9174
1.Cost of Ending inventory (First in First Out Method)
First in First out method implies that inventory purchased first will be sold first., with this in mind, We Can conclude ending inventory units of 278 come from the inventory purchased on the 23rd of June.
Ending inventory units = 278 x $11 = $3058
Cost of good sold
Cost of goods sold = $3336 + $7784 + $6116*
Cost of goods sold = $17236
* (834 - 278 x $11)= 556 x $11 = $6116
Cost of Ending inventory Last In First Out
Last In First Out method implies that most recently purchased inventory will be sold first therefore We can conclude that the ending inventory units come from opening inventory units
Ending Inventory = 278 x $6 = $1668
Cost of goods sold = $9174 + $7784 + $1668*
Cost of goods sold = $18626
*(556 - 278) x $6 = 278 x $6 = $1668
2 FIFO Method gives a higher a higher ending inventory Balance ($3058) than LIFO Method ($1668). Ending inventory unit cost under FIFO Method is $11 while the ending inventory unit cost under LIFO Method is $6
3. LIFO Method Provides Higher Cost of goods sold ($18626) than FIFO Method ($17236). LIFO Method includes the entire units of inventory purchased on the 23 June costing $11 per unit while Cost of goods sold under FIFO Method has only 556 units from the units purchase on the 23rd of June costing $11 per unit
