Ace Lawn Care Module 3 Mini Practice Problem       In June, Jim decided to open a small retail operation selling bags of...

Ace Lawn Care Module 3 Mini Practice Problem

In June, Jim decided to open a small retail operation selling bags of fertilizer to the public.  He has decided to begin by offering two kinds of fertilizer.  Below is the information for the month of June, 2014, for the two types of fertilizer.

Purchase Data

All purchases are paid in cash at the time of the purchase and Jim picks up the fertilizer from the distributor, so there is no freight charge.

Sales Data (summarized by week)

All sales are on credit.

In addition to the sales, on 6/20/14, a customer returned one bag of Feed All Fertilizer to Jim for credit on account.

Instructions:

1.     Calculate the Cost of Goods Sold and the Ending Inventory values for the fertilizer products under 1) Average Cost, 2) First-In, First-Out(FIFO), and 3) Last-In, First-Out (LIFO). You will need to calculate ending inventory from the purchase, sale and return data given, you may assume that a physical count confirmed your calculation of the number of units in ending inventory.

2.     Assume that Jim decides to use the FIFO method and compute the lower of cost or market (LCM) value to be reported for the end of June, 2014. Use the last purchase prices for the market value.  You only need to calculate cost under the FIFO method for this comparison. 

3.     Prepare the Cost of Goods Sold section of the Income Statement.