Response to the following problem:
Calculate ending inventory and cost of goods sold using the last in, first out (LIFO); moving; and weighted average methods.
Tony Merchandise Company has the following information for the month of February:
|
Feb. 2
|
Beginning inventory
|
20
|
units
|
@
|
$12
|
per unit
|
|
Feb. 5
|
Purchase
|
20
|
units
|
@
|
$16
|
per unit
|
|
Feb. 8
|
Sale
|
12
|
units
|
|
|
|
|
Feb. 21
|
Purchase
|
12
|
units
|
@
|
$18
|
per unit
|
|
Feb. 25
|
Sale
|
14
|
units
|
|
|
|
Answer the following questions for Tony Merchandise Company:
1. Calculate the dollar ending inventory if first in, first out (FIFO) is used.
2. Calculate the cost of goods sold if LIFO is used.
3. Calculate the dollar ending inventory if weighted average is used.
4. According to the generally accepted accounting principles (GAAP), discuss the objectives of inventory costing.
5. Discuss the consequences of selecting one method instead of others.