In an inflationary period, which inventory method—FIFO, LIFO, average cost—will show the highest net… 1 answer below »

(FIFO, LIFO, and Average Cost Determination) LoBianco Company’s record of transactions for the month of April was as follows.

Purchases

Sales

April 1 (balance on hand)

600 @

$6.00

3-Apr

500 @

$10.00

4

1,500 @

6.08

9

1,300 @

10

8

800 @

6.4

11

600 @

11

13

1,200 @

6.5

23

1,200 @

11

21

700 @

6.6

27

900 @

12

29

500 @

6.79  

4,500    

5,300        

Instructions

(a) Assuming that periodic inventory records are kept, compute the inventory at April 30 using (1) LIFO and (2) average cost.

(b) Assuming that perpetual inventory records are kept in both units and dollars, determine the inventory at April 30 using (1) FIFO and (2) LIFO.

(c) Compute cost of goods sold assuming periodic inventory procedures and inventory priced at FIFO.

(d) In an inflationary period, which inventory method—FIFO, LIFO, average cost—will show the highest net income?

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