Comutation based on LIFO

Inventory turn over rate

Cost of Goods Sold $ 365,086.00

Average Inventory $ 45,000.00
8.113
8.11 Times

Comutation based on LIFO

Current Ratio

Current Assets $ 63,278.00

Current Liabilities $ 65,272.00
0.969
Ratio- .097:1

Comutation based on LIFO

Gross Profit

Gross Profit $ 117,143.00

Current Liabilities $ 482,229.00
24.292%
Ratio- 24.30%

b. If the average cost of goods sold would be lower under FIFO, Walmart must have encountered
more expensive replacement costs for its products throughout the calendar year.

c. If the company used FIFO rather tha LIFO, they would experience a lower cost of goods, a higher
inventory value, and a lower turnover percent with the inventory turnover rate. If calculating the
current ratio, the inventory would be a higher value therefore the ratio would be higher. While
using the gross profit formula, the overall gross profit would be higher because the cost of the
inventory would be lower.
encountered

goods, a higher
calculating the
higher. While
he cost of the
 General Journal
Date 2018 Specific Identification Method

Jan 15 Cost of Goods Sold

Inventory
Sold 1,000 Ace-5 reels Anglers
Warehouse: 500 Units at $29 per unit and 500 Units at $32

Average Cost Method

Jan 15 Cost of Goods Sold
Inventory
Sold 1000 Ace - 5 reels sold Anglers
1,000 units @ 30.80 (46,200 total cost, divided by 1500 Units= 30800)

FIFO Method
Jan 15 Cost of Goods Sold
Inventory
Sold 1000 Ace - 5 reels sold Anglers
Cost is determined by the flow of FIFO- Since we are unsure, it will be an assump

Assumption: 600 units at $29 plus 400 units at $32= $30200

LIFO Method
Jan 15 Cost of Goods Sold
Inventory
Sold 1000 Ace - 5 reels sold Anglers
Cost is determined by the flow of LIFO- Since we are unsure, it will be an assump

Assumption: 900 Units at $32 plus 100 Units at $29= $31700

Purchased Sold Balance

Date Units Unit Cost Total Units Unit Cost Cost of Goods Sold Units Unit Cost

12-Dec 600 $ 29.00 $ 17,400.00 600 $ 29.00

9-Jan 900 $ 32.00 $ 28,800.00 600 $ 29.00

900 $ 32.00
15-Jan 500 $ 29.00 100 $ 29.00
500 $ 32.00 $ 30,500.00 400 $ 32.00
Specific Identification Method ^
 Purchased Sold Balance
Date Units Cost Total Units Cost Cost of Goods Sold Units Cost

12-Dec 600 $ 29.00 $ 17,400.00 600 $ 29.00

9-Jan 900 $ 32.00 $ 28,800.00 1500 $ 30.80

15-Jan 1000 $ 30.80 $ 30,800.00 500 $ 30.80

Average cost per unit = $46200 total cost/1500units= 30.80 Average Unit Cost
Average Cost ^
Purchased Sold Balance
Date Units Unit Cost Total Units Unit Cost Cost of Goods Sold Units Unit Cost

12-Dec 600 $ 29.00 $ 17,400.00 600 $ 29.00

9-Jan 900 $ 32.00 $ 28,800.00 600 $ 29.00

900 $ 32.00
15-Jan 600 $ 29.00
400 $ 32.00 $ 30,200.00 500 $ 32.00
FIFO Method ^

Purchased Sold Balance

Date Units Unit Cost Total Units Unit Cost Cost of Goods Sold Units Unit Cost

12-Dec 600 $ 29.00 $ 17,400.00 600 $ 29.00

9-Jan 900 $ 32.00 $ 28,800.00 600 $ 29.00

900 $ 32.00
15-Jan 900 $ 32.00
100 $ 29.00 $ 31,700.00 500 $ 29.00
LIFO method ^

c. No, the company can not use the lowest cost method for tax purposes because it would not be ethical. The
the highest was the FIFO method. This is because the unit cost between the two purchases switched (flip fl
29 dollars compared to 32 dollars. If they were to use this to report for tax reasons, they would also need t
company needs to be consistent with both entries.
General Journal
on Method

$ 30,500.00

$ 30,500.00

Method
$ 30,800.00
$ 30,800.00

Units= 30800)

od
$ 30,200.00
$ 30,200.00

sure, it will be an assumption

$ 31,700.00
$ 31,700.00

sure, it will be an assumption

Balance

$ 17,400.00

$ 46,200.00

$ 15,700.00
 Balance

$ 17,400.00

$ 46,200.00
$ 15,400.00

Balance

$ 17,400.00

$ 46,200.00

$ 16,000.00

Balance

$ 17,400.00

$ 46,200.00

$ 14,500.00

would not be ethical. The lowest cost method was the FIFO method and
purchases switched (flip flopped) with both methods. The unit cost was
s, they would also need to report it in the financial statements. The