Learning Objective 2: Compare inventory by three methods) Robinett Camping Surplus began April 2016 with 100 tents that cost $15 each. During the month, Robinett Camping Surplus made the following purchases at cost:

April 8 80 tents @ $20 = $1,600

19 140 tents @ $25 = 3,500

26 80 tents @ $30 = 2,400

Robinett Camping Surplus sold 307 tents, and at April 30, the ending inventory consists of 93 tents. The sale price of each tent was $50.

Requirements:

1. Determine the cost of goods sold and ending inventory amounts for April under the average cost, FIFO cost, and LIFO cost. Round average cost per unit to two decimal places, and round all other amounts to the nearest dollar.

2. Explain why cost of goods sold is highest under LIFO. Be specific.

3. Prepare the Camping Surplus income statement for April. Report gross profit. Operating expenses totaled $3,250. Robinett Camping Surplus uses average costing for inventory. The income tax rate is 30%.

Solution:
	Req. 1
	Inventory
	Beg. bal.		(100 units @ $15)		1,500
	Purchases:
	Apr.	8	(80 units @ $20)		1,600
		19	(140 units @ $25)		3,500	Cost of goods sold
		26	(80 units @ $30)		2,400	(307 units @ $?)			?
	End. bal.		(93 units @ $?)		?
			Cost of Goods Sold			Ending Inventory
	Average cost		307 $???* = $				93 $???* = $
	*Average cost per unit		=						= $
				($ + + + )
				( + + + )
	FIFO	(?? @ $) + (?? @ $)					(?? @ $) +
			+ (?? @ $)		= $		(?? @ $)		= $
	LIFO	(?? @ $) + (?? @ $) +
		(?? @ $) + (?? @ $)					?? @ $		= $
			= $
	Req. 2
	Req. 3
		Robinett Camping Surplus
		Income Statement
		Month Ended April 30, 2016
		Sales revenue (?? x $)
		Cost of goods sold
		Gross profit							-
		Operating expenses
		Income before income taxes							-
		Income tax expense (30%)
		Net income							-