Compute the below schedule for 2013 and 2014 for FIFOLIFO an

Compute the below schedule for 2013 and 2014 for FIFO/LIFO and Weighted Average

Watkins Corporation began operations on January 1, 2013. Ine zm chases and sales are as follows: 2013: 10 units $10 per unit $100 20 units @ $12 per unit 240 Purchase 1 Purchase2 Total purchase costs Sales $340 15 units $30 per unit $450 2014: Purchase 1 Purchase2 Total purchase costs Sales 10 units $13 per unit $130 15 units $15 per unit225 $355 3 20 units @ $35 per unit $700 Complete the following schedule, and briefly discuss the trade-offs associated with choosing an inven- tory cost flow assumption. 2013 Cost of goods sold Gross profit (Sales - COGS) Ending inventory 2014 Cost of goods sold Gross profit (Sales - COGS) Ending inventory FIFO Weighted Average LIFO FIFO Weighted Average LIFO

Solution

2013 Units Rate per unit Amount Beginning inventory 0 0 0 Purchases 1 10 10 100 Purchases 2 20 12 240 Cost of goods available for sale 30 11.33 340 Less units sold 15 Ending inventory 15 Ending inventory Average cost 170 (11.33*15) FIFO Units Per unit Total Purchase 2 15 12 180 Total 15 180 LIFO Purchase 1 10 10 100 Purchase 2 5 12 60 Total 15 160 Average FIFO LIFO Cost of goods available for sale 340 340 340 Less Ending inventory 170 180 160 Cost of goods sold 170 160 180 Average FIFO LIFO Sales revenue 450 450 450 Cost of goods sold 170 160 180 Gross profit 280 290 270 2014 Units Rate per unit Amount Beginning inventory 15 11.33 170 Purchases 1 10 13 130 Purchases 2 15 15 225 Cost of goods available for sale 40 13.125 525 Less units sold 20 30-Jun Ending inventory 20 weighted average cost per unit 13.125 Ending inventory Average cost 263 (13.125*20) FIFO Units Per unit Total Purchase 1 5 13 65 Purchase 2 15 15 225 Total 20 290 LIFO Beginning inventory 15 160 Purchase 1 5 13 65 Total 20 225 Average FIFO LIFO Beginning inventory 170 180 160 Add Purchase during year 355 355 355 Cost of goods available for sale 525 535 515 Less Ending inventory 263 290 225 Cost of goods sold 263 245 290 Average FIFO LIFO Sales revenue 700 700 700 Cost of goods sold 263 245 290 Gross profit 438 455 410