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    Ending inventory,COGS and Net income under the FIFO method

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    Purchases: July 15
    5500 units
    $9.00 per unit
    November 12 Spark Company's inventory records show the following data
    Inventory, January 1, 2013
    6,000 units
    3500 units
    $8.00 per unit

    A physical inventory on December 31 2013 shows 4,000 units on hand. Spark sells the units for $18 each. The company has an effective tax rate of 20%. Spark uses the periodic inventory method.
    Under the FIFO method, calculate ending inventory at Dec 31st 2013, cost of goods sold and present statement of income for the period ended 31st December 2013 in the proper form.

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    Solution Preview

    See the attached file.

    Periodic system-FIFO
    Cost of Goods available for sale
    Date Explanation Units Unit cost Total cost
    01-Jan Beginning inventory 6000 10 $60,000
    15-Jul Purchase 5500 9 $49,500
    12-Nov Purchase 3500 8 $28,000
    Total 15000 $137,500

    Ending inventory ...

    Solution Summary

    The solution contains step by step calculations of Ending inventory under periodic system using the FIFO method. It also covers calculations of cost of goods sold on the basis of cost of goods available for sale and ending inventory. Further statement showing per-tax and after-tax net income is provided.