GROUP ASSIGNMENT COVER SHEET
STUDENT DETAILS
Student name: Lê Đức Thuấn Student ID number: 23003816
Student name: Trần Kim Hỷ Student ID number: 22003735
Student name: Trần Thanh Vy Student ID number: 22003002
Student name: Lê Hoàng Minh Student ID number: 24007056
Student name: Tôn Thất Nguyên Bách Student ID number: 23005958
UNIT AND TUTORIAL DETAILS
Unit name: Principles of Accounting Unit number: PA-T125WSB-6
Tutorial/Lecture: Class day and time: Saturday, 8 a.m
Lecturer or Tutor name: Nguyen Lam Bao Tran
ASSIGNMENT DETAILS
Title: Tutorial test 6
Length: Due date: 01/03/2025 Date submitted: 01/03/2025
DECLARATION
I hold a copy of this assignment if the original is lost or damaged.
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from any other source except where due acknowledgement is made in the assignment.
I hereby certify that no part of this assignment or product has been submitted by me in another
(previous or current) assessment, except where appropriately referenced, and with prior permission
from the Lecturer / Tutor / Unit Coordinator for this unit.
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plagiarism checking).
Student’s signature: Vy
Student’s signature: Hy
Student’s signature: Thuan
Student’s signature: Minh
Student’s signature: Bach
Note: An examiner or lecturer / tutor has the right to not mark this assignment if the above declaration has not
been signed.
TUTORIAL TEST 6
The inventory, purchases, and sales for a recent month in chronological order are as follows:
Date Activities Units Acquired and Sold
Aug 2 Beginning Inventory 150 units @ $ 12.00
Aug 9 Purchase 280 units @ $ 13
Aug 12 Sales 300 units
Aug 18 Purchase 400 units @ $ 14.5
Aug 24 Purchase 200 units @ $ 15
Aug 30 Sales 500 units
Assume that company is using a perpetual inventory system.
Requirements:
Compute the cost of goods sold using:
a. FIFO
● Aug 12 Sale (300 units)
○ 150 units from $12 = 150 × $12 = $1,800
○ 150 units from $13 = 150 × $13 = $1,950
○ Total COGS = $3,750
○ Remaining Inventory: 130 @ $13
● Aug 18 Purchase (400 units @ $14.50)
○ New Inventory: 130 @ $13, 400 @ $14.50
● Aug 24 Purchase (200 units @ $15.00)
○ New Inventory: 130 @ $13, 400 @ $14.50, 200 @ $15
● Aug 30 Sale (500 units)
○ 130 units from $13 = 130 × $13 = $1,690
○ 370 units from $14.50 = 370 × $14.50 = $5,365
○ Total COGS = $7,055
○ Remaining Inventory: 30 @ $14.50, 200 @ $15
Total COGS = $3,750 + $7,055 = $10,805
b. LIFO
● Aug 2 (Beginning Inventory)
150 units @ $12.00 = 150 x $12 = $1,800
● Aug 9 (Purchase 280 units @ $13.00)
280 units @ $13.00 = $3,640
Total Inventory = 150 x $12 + 280 x $13 = $5,440
● August 12 – Sales (300 units)
280 units @ $13 = $3,640
20 units @ $12 = $240
Total COGS = $3,640 + $240 = $3,880
Remaining Inventory: 130 units @ $12.00 = $1,560
● August 18 – Purchase
400 units @ $14.50 = $5,800
Total Inventory = 130 x $12 + 400 x $14,5 = $7,360
● August 24 – Purchase
200 units @ $15.00 = $3,000
Total Inventory = 130 x $12 + 400 x 14,5 + 200 x $15 = $10,360
● August 30 – Sales (500 units)
200 units @ $15.00 = 200 x $15= $3,000
300 units @ $14.50 = 300 x $14,5 = $4,350
Total COGS = $3,000 + $4,350 = $7,350
August 12 Sales: $3,880
August 30 Sales: $7,350
Total COGS = $3,880 + $7,350 = $11,230
C. Weighted Average
Calculate the average cost after each transaction
● August 2: Beginning inventory: 150 units @ $12.00 → Average cost = $12.00
● August 9: Purchase of 280 units @ $13.00
○ Total cost = (150 × $12) + (280 × $13) = $1,800 + $3,640 = $5,440
○ Total units = 150 + 280 = 430
○ New average cost = $5,440 ÷ 430 = $12.57
● August 12: Sale of 300 units @ $12.57
○ Cost of Goods Sold (COGS) = 300 × $12.57 = $3,771
○ Remaining units = 430 - 300 = 130
● August 18: Purchase of 400 units @ $14.50
○ Total cost = (130 × $12.57) + (400 × $14.50) = $1,634 + $5,800 = $7,434
○ Total units = 130 + 400 = 530
○ New average cost = $7,434 ÷ 530 = $13.78
● August 24: Purchase of 200 units @ $15.00
○ Total cost = (530 × $13.78) + (200 × $15) = $7,434 + $3,000 = $10,434
○ Total units = 530 + 200 = 730
○ New average cost = $10,434 ÷ 730 = $14.27
● August 30: Sale of 500 units @ $14.27
○ COGS = 500 × $14.27 = $7,135
○ Remaining units = 730 - 500 = 230
Calculate Total Cost of Goods Sold (COGS)
Total: COGS = $3,771 (August 12 sale) + $7,135 (August 30 sale) = $10,906
D. Comparison and Effects on Financial Statements
1. COGS & Net Income:
a. FIFO:
Lowest COGS ($10,805) in a rising price environment, which results in the
highest reported net income.
b. LIFO:
Highest COGS leading to the lowest net income.
c. Weighted Average:
COGS falls between FIFO and LIFO, producing net income that is between the
other two methods.
2. Ending Inventory Valuation:
a. FIFO:
Ending inventory is higher because the most recent (and higher cost) purchases
remain on hand.
b. LIFO:
Ending inventory is lower as older (lower cost) inventory remains.
c. Weighted Average:
Ending inventory is a blend between FIFO and LIFO.
3. Balance Sheet Impact:
a. FIFO tends to show higher inventory values on the balance sheet and lower COGS on the
income statement, potentially increasing the current ratio and profitability.
b. LIFO results in lower inventory values on the balance sheet and higher COGS on the
income statement, which can reduce reported profits and may lower tax liabilities in
times of rising prices.
c. Weighted Average provides moderate results that smooth out price fluctuations.
