Question: Pete's Tennis Shop has the following transactions related to its top-selling Wilson tennis racket for the month of August 2012:
Required: 1. Calculate ending inventory and cost of goods sold at August 31, 2012, using the specific identification method. The August 4 sale consists of rackets from beginning inventory, the August 13 sale consists of rackets from the August 11 purchase, and the August 26 sale consists of one racket from beginning inventory and 10 rackets from the August 20 purchase.
2. Using FIFO, calculate ending inventory and cost of goods sold at August 31, 2012.
3. Using LIFO, calculate ending inventory and cost of goods sold at August 31, 2012.
4. Using weighted-average cost, calculate ending inventory and cost of goods sold at August 31, 2012.
5. Calculate sales revenue and gross profit under each of the four methods.
6. Comparing FIFO and LIFO, which one provides the more meaningful measure of ending inventory? Explain.
7. If Pete's chooses to report inventory using LIFO, record the LIFO adjustment.