Valuation Of Inventories

Matlock Company uses a perpetual inventory system. Its beginning inventory consists of 50 units that cost $34 each. During June, the company purchased 150 units at $34 each, returned 6 units forcredit, and sold 125 units at $50 each. Journalize the June transactions.

Inventory (150 X $34).......................................................... 5,100
AccountsPayable................................................................. 5,100

Accounts Payable (6 X $34) ................................................ 204Inventory.............................................................................. 204

Accounts Receivable (125 X $50)........................................ 6,250Sales...................................................................................... 6,250

Cost of Goods Sold (125 X $34)........................................... 4,250
Inventory............................................................................... 4,250Compute FIFO, LIFO, Average Cost—Periodic Presented below is information related to radios for the Couples Company for the month of July.
A. Assuming that the periodic inventory method is used, computethe inventory cost at July 31 under each of the following cost flow assumptions.
(1) FIFO.
(2) LIFO.
(3) Weighted-average.
B Answer the following questions.
(1) Which of the methods used abovewill yield the lowest figure for gross profit for the income statement? Explain why.
(2) Which of the methods used above will yield the lowest figure for ending inventory for the balance sheet?Explain why.

A. 1. 2,100 units available for sale-100 units sold= 700 units in the ending inventory.
500@$4.58= $2,290
200@$4.60= 920
700 $3,210 Ending inventoryat FIFO cost

2.
100@$410= $410
600@$4.30= 2,580
700@ $2,990 Ending inventory at LIFO cost

3. $9,324 cost of goods available for sale / 2,100 units available for...