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.
|
March 5
|
3,010 @ $8
|
March 21
|
4,010 @ $10
|
|
March 13
|
5,510 @ $9
|
March 26
|
2,010 @ $11
|
During March 12,500 units were sold. Glanville uses a periodic inventory system.
Correct.
Determine the cost of goods available for sale. $ 19700
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). (Round the unit cost in the average cost method to 2 decimal places. Use the rounded amounts for subsequent calculations. Round final answers to 0 decimal places.)
|
|
FIFO
|
LIFO
|
Average Cost
|
|
Ending Inventory
|
$ 5800
|
$ 4200
|
$ 4925
|
|
Cost of Goods Sold
|
$ 13900
|
$ 15500
|
$ ?????
|
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?
Lowest inventory amount LIFO
Lowest cost of goods sold FIFO