Problem 6-5A

You are provided with the following information for Najera Inc. for the month ended June 30, 2017. Najera uses the periodic method for inventory.

Date Description Quantity Unit Cost or Selling Price June 1 Beginning inventory 39 $42 June 4 Purchase 139 46 June 10 Sale 107 70 June 11 Sale return 18 70 June 18 Purchase 56 48 June 18 Purchase return 11 48 June 25 Sale 67 75 June 28 Purchase 32 52

Calculate cost per unit. (Round answer to 2 decimal places, e.g. 5.25.)

Weighted-average cost per unit $

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Calculate ending inventory, cost of goods sold, gross profit under each of the following methods. (1) LIFO. (2) FIFO. (3) Average-cost. (Round average-cost method answers to 2 decimal places, e.g. 1,250.25 and other answers to 0 decimal places, e.g. 1,250. Use weighted-average unit cost rounded to 2 decimal places for computations.)

LIFO FIFO AVERAGE-COST The ending inventory $ $ $ The cost of goods sold $ $ $ Gross profit $ $ $

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Calculate gross profit rate under each of the following methods. (1) LIFO. (2) FIFO. (3) Average-cost. (Round answers to 1 decimal place, e.g. 51.2%.)

LIFO FIFO AVERAGE-COST Gross profit rate % % %

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Compare the results for the three cost flow assumptions and answer the following questions.

In this period of rising prices, LIFO gives the lowest highest cost of goods sold and the highest lowest gross profit. FIFO gives the lowest highest cost of goods sold and the highest lowest gross profit.

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