On Jan. 15, 2009, BassTrack sold 1,000 Ace-5 fishing reels to Angler's Warehouse. Immediately prior to the sale, BassTrack's perpetual inventory records for Ace-5 reels included the following cost layers:
Purchase date: Quanity: Unit Cost: Total Cost:
- Dec. 12, 2008 600 $29 $17,400
- Jan.9, 2009 900 $32 $28,800
- Total on hand 1500 $46,200
a. Prepare a seperate journal entry to record the cost of goods sold relating to the January 15 sale of 1,000 Ace-5 reels, assuming tha BassTrack uses:
1. Specific identification (500 of the units sold were purchased on December 12, and the remaining 500 were purchased on January 9).
2. Average cost
3. FIFO
4.LIFO
b. Complete a subsidary ledger record for Ace-5 reels using each of the four inventory valuations methods listed above. Your inventory records should show both purchases of this product, the sale on Jan 15, and the balance on hand at Dec 12, Jan 9, and Jan 15.
c. Refer to the cost of goods sold figures computed in part a. For financial reporting purposes, can the company use the valuation method that resulted in the lowest cost of goods sold if, for tax purposes, it used the method that resulted in the highest cost of goods sold? explain