i) Valuation under FIFO:

Purchases Sales

Date Quantity Rate Per Total Quantity Rateii)

PerAverage
Unit Cost Method:
Unit
Purchases Sales
April       1 Balance
Date Quantity Rate Per Total Quantity Rate
3 500 $6.00 Unit

4 1500 $6.80 $10,200 April       1 Balance

3 500 $6.00

8 800 $6.40 $5,120 4 1500 $6.80 $10,200

8 800 $6.40 $5,120

9 1300 $6.63

9 100 $6.0011 600 $6.63

1200 13 1200 $6.50 $7,800

11 300 $6.8021 700 $6.60 $4,620

300 $6.4023 1200 6.54

13 1200 $6.50 $7,800 27 900 6.56

29 500 $6.79 $3,395

In an inflationary environment, the cost of goods includes the

21 700 $6.60 $4,620
less expensive items while ending inventory includes the
more expensive items. This means that the net income and
ending inventory amounts are higher under the FIFO method.
However, in a deflationary environment, the FIFO method is
likely to generate lower net income.
23 500 $6.40

700 $6.50

27 500 $6.50

400 $6.60

29 500 $6.79 $3,395

Total Inventory Value