Jeters Company reports the following for the month of June. Date Explanation Units Unit Cost Total Cost June 1 Inventory 120 $5 $ 600 12 Purchase 370 6 2,220 23 Purchase 200 7 1,400 30 Inventory 230 Instructions (a) Compute the cost of the ending inventory and the cost of goods sold under (1) FIFO, (2) LIFO, and (3) average-cost. (Round average unit cost to three decimal places.) (b) Which costing method gives the highest ending inventory

Instructions are listed below

Explanation:

Giving the following information:

June 1:

Inventory: 120 units for $5 = $600

June 12:

Purchase: 370units for $6 = $2,220

June 23:

Purchase: 200 units for $7 = $1,400

June 30:

Ending Inventory 230 units

Units sold = 460

Under FIFO method, the first units-in are the first to go out. Therefore, the ending inventory has the value of the last units purchased.

Inventory = 200*7 + 30*6 = $1,580

COGS = 120*5 + 340*6 = $2,640

Under LIFO method, the lasts units-in are the first out.

Inventory = 120*5 + 110*6 = $1,260

COGS = 260*6 + 200*7 = $2,960

Under the average cost method, we calculate an average buying price and then calculate the ending inventory and cost of goods sold:

Average price = (5 + 6 + 7) / 3 = 6

Inventory = 230*6 = $1,380

COGS = 460*6 = $2,760

The highest ending inventory is from FIFO method.