Analysis of various methods of inventory system and its effect on ending inventory and cost of goods sold.
Glanville Distribution markets CDs of the performing artist Harrilyn Clooney. At the beginning of March, Glanville had in beginning inventory 1,510 Clooney CDs with a unit cost of $7. During March Glanville made the following purchases of Clooney CDs.
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March 5
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3,010 @ $8
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March 21
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4,010 @ $10
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March 13
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5,510 @ $9
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March 26
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2,010 @ $11
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During March 12,500 units were sold. Glanville uses a periodic inventory system.
Correct.
Incorrect.
Determine (1) the ending inventory and (2) the cost of goods sold under each of the assumed cost flow methods (FIFO, LIFO, and average-cost). Prove the accuracy of the cost of goods sold under the FIFO and LIFO methods. (Round the unit cost in the average cost method to 3 decimal places. Use the rounded amounts for subsequent calculations. Round final answers to 0 decimal places.)
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FIFO
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LIFO
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Average Cost
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Ending Inventory
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$ 37,510
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$ 26,890
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$ 32394
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Cost of Goods Sold
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$ 108,940
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$ 119,560
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$ ?????
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Correct.
Which cost flow method results in (1) the lowest inventory amount for the balance sheet, and (2) the lowest cost of goods sold for the income statement?
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Lowest inventory amount
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LIFO
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Lowest cost of goods sold
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FIFO
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