Compute the cost of the ending inventory and the cost of goods sold under (1) FIFO, (2) LIFO, and
Shawn Company had 100 units in beginning inventory at a total cost of $10,000. The company purchased 200 units at a total cost of $26,000. At the end of the year, Shawn had 75 units in ending
inventory.
Instructions
a. Compute the cost of the ending inventory and the cost of goods sold under (1) FIFO, (2) LIFO, and
(3) average-cost.
b. Which cost flow method would result in the highest net income?
c. Which cost flow method would result in inventories approximating current cost in the balance
sheet?
d. Which cost flow method would result in Shawn paying the least taxes in the first year?