Lewis Corporation. Case Solution

Units Unit Cost Total Cost
From the Beginning Inventory 1840.00 20.00 36800.00
From the first purchase 600.00 20.25 12150.00
From the second purchase 380.00 21.00 7980.00
2820.00 56930.00
From the Second purchase 420.00 21.00 8820.00
From the third purchase 400.00 21.25 8500.00
From the second purchase 200.00 21.50 4300.00
1020.00 21.20 21620.00
Units Unit Cost Total Cost
From the Beginning Inventory 1020.00 21.20 21624.00
From the first purchase 700.00 21.50 15050.00
From the second purchase 700.00 21.50 15050.00
Inventory Statement for 2006, FIFO Method
Cost of Goods Sold
Cost of Goods Sold
Total / Cost of Goods Sold
Ending Inventory
Total / Ending Inventory
Inventory Statement for 2005, FIFO Method
From the third purchase 660.00 22.00 14520.00
3080.00 66244.00
From the third purchase 40.00 22.00 880.00
From the fourth purchase 1000.00 22.25 22250.00
1040.00 22.24 23130.00
Units Unit Cost Total Cost
From the Beginning Inventory 1040.00 22.24 23129.60
From the first purchase 1000.00 22.50 22500.00
From the second purchase 700.00 22.75 15925.00
From the third purchase 210.00 23.00 4830.00
2950.00 66384.60
From the third purchase 490.00 23.00 11270.00
From the fourth purchase 700.00 23.50 16450.00
1190.00 23.29 27720.00
Submited By;
Manish Parmar, Section: C
Roll # 2010PGP179
Inventory Statement for 2007, FIFO Method
Cost of Goods Sold
Total / Cost of Goods Sold
Ending Inventory
Total / Ending Inventory
Total / Cost of Goods Sold
Ending Inventory
Total / Ending Inventory
Units Unit Cost Total Cost
From the fourth purchase 200.00 21.50 4300.00
From the third purchase 400.00 21.25 8500.00
From the second purchase 800.00 21.00 16800.00
From the first purchase 600 20.25 12150.00
From the beginning inventory 820 20.00 16400.00
2820.00 58150.00
From the beginning inventory 1020.00 20.00 20400.00
1020.00 20.00 20400.00
Units Unit Cost Total Cost
From the fourth purchase 1000.00 22.25 22250.00
From the third purchase 700.00 22.00 15400.00
From the second purchase 700.00 21.50 15050.00
Inventory Statement for 2006, LIFO Method
Cost of Goods Sold
Cost of Goods Sold
Total / Cost of Goods Sold
Total / Ending Inventory
Ending Inventory
Inventory Statement for 2005, LIFO Method
From the first purchase 680.00 21.50 14620.00
3080.00 67320.00
From the first purchase 20.00 21.50 430.00
From the beginning inventory 1020.00 22.24 22684.80
1040.00 22.23 23114.80
Units Unit Cost Total Cost
From the fourth purchase 700.00 23.50 16450.00
From the third purchase 700.00 23.00 16100.00
From the second purchase 700.00 22.75 15925.00
From the first purchase 850.00 22.50 19125.00
2950.00 67600.00
Fromt the first purchase 150.00 22.50 3375.00
From the beginning inventory 1000.00 23.50 23500.00
1150.00 23.37 26875.00
Submited By;
Manish Parmar, Section: C
Roll # 2010PGP179
Total / Cost of Goods Sold
Total / Ending Inventory
Inventory Statement for 2007, LIFO Method
Cost of Goods Sold
Total / Cost of Goods Sold
Ending Inventory
Ending Inventory
Total / Ending Inventory
Units Avg Cost Total Cost
2820.00 20.46 57685.16
1020.00 20.46 20864.84
Units Avg Cost Total Cost
Cost of Goods Sold
Inventory Statement for 2005, Avg Method
Total / Ending Inventory
Inventory Statement for 2006, Avg Method
Cost of Goods Sold
Ending Inventory
Total / Cost of Goods Sold
3080.00 21.51 66249.30
1040.00 20.51 21330.40
Units Avg Cost Total Cost
2950.00 22.30 65773.17
1190.00 22.30 26537.00
Submited By;
Manish Parmar, Section: C
Roll # 2010PGP179
Total / Cost of Goods Sold
Inventory Statement for 2007, Avg Method
Cost of Goods Sold
Total / Cost of Goods Sold
Ending Inventory
Total / Ending Inventory
Ending Inventory
Total / Ending Inventory
FIFO LIFO Avg
2005 Total Total Total
Cost of goods sold 56930 58150 57685
Ending Inventory 21620 20400 20865
2006
Cost of goods sold 66244 67320 66249
Ending Inventory 23130 23115 21330
2007
Cost of goods sold 66385 67600 65773
Ending Inventory 27720 26875 26537
FIFO LIFO Avg
2005
95880 95880 95880
Less: Cost of goods sold 56930 58150 57685
Profit in 2005 38950 37730 38195
2006
110110 110110 110110
Ans: 1. Comparison of all the three methods
MAC - 1. Assignment # . Lewis Corporation.
Revenue
Revenue
Less: Cost of goods sold 66244 67320 66249
Profit in 2006 43866 42790 43861
2007
105463 105463 105463
Less: Cost of goods sold 66385 67600 65773
Profit in 2007 39078 37863 39689
Total Profit 121894 118383 121745
Income tax @ 40 % 48758 47353 48698
Submited By;
Manish Parmar, Section: C
Roll # 2010PGP179
Revenue
Ans:2
As can be seen from the above table, the lowest profit is found when it's calculated with the LIFO method, and same is the case with the income tax. So It's recommended that the company switches from FIFO to LIFO.