02 PM Remaining 31 min uestion 1 company just starting busin

:02 PM Remaining: 31 min. uestion 1 company just starting business made the following four inventory purchases in June: Date June 1 June 10 June 15 June 28 Number of units purchased 190 units 200 units 200 units 130 units Total cost 380 580 650 500 $2110 A physical count of merchandise inventory on June 30 reveals that there are 290 units on hand. The inventory method which results in the highest gross profit for June is O the FIFO method. not determinable. O the LIFO method. the weighted average unit cost method.

Solution

Q1 Date No of units purchased Total Cost Unit Cost June 1 190 380 $      2.00 June 10 200 580 $      2.90 June 15 200 650 $      3.25 June 28 130 500 $      3.85 Ans A FIFO Method As we can see from unit cost prices are rising, and for highest gross profit cost of goods sold should be lowest and Cost of goods sold will be lowest when FIFO is used, Using FIFO COGS will be lowest since prices are rising. Q2 Date No of units purchased Total Cost Unit Cost June 1 130 390 $      3.00 June 10 220 580 $      2.64 June 15 220 640 $      2.91 June 28 110 470 $      4.27 Ans A $680 LIFO Calculation Date Units Unit Cost June 1 130 3 390 June 10 110 2.64 290.4 240 680.4 Q3 Date No of units purchased Total Cost Unit Cost Balance 1/1/16 250 4 1000 Purchase 1/15/16 70 5.4 378 Purchase 1/28/16 70 5.7 399 FIFO calculation Date Units Unit Cost Purchase 1/28/16 70 5.7 399 Purchase 1/15/16 70 5.4 378 Balance 1/1/16 110 4 440 250 1217 Ans should be $1217 but option given is totally different, please check for any printing error in given question.