2. Inventory valuation methods: Basic computations
The January beginning inventory of the Gilette Company consisted of 300 units costing $40 each. During
the first quarter, the company purchased two batches of goods: 700 Units at $44 on February 21 and 800 units at $50 on March 28. Sales during the first quarter were 1,400 units at $75 per unit. The White Company uses a periodic inventory system. Using the White Company data, fill in the following chart to compare the results obtained under the FIFO, LIFO, and weighted-average inventory methods.
FIFO LIFO Weighted
Goods available for sale $ $ $
Ending inventory, March 31
Cost of goods sold
b. Which of the three methods would be chosen if management’s goal is to:
(1) Produce an up-to-date inventory valuation on the balance sheet?
(2) Show the lowest net income for tax purposes?
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