Two Wheels operates on a fiscal year beginning January 1. At the beginning of the year, the shop had 6 bicycles @$394 each (opening inventory). During the year the business made the following purchases:
- Date Bicycle Cost
- Jan.20 4 $399
- Mar. 5 5 $415
- Apr. 23 7 $419
- Aug. 14 4 $423
- Oct. 3 6 $430
- Nov. 17 3 $435
There were seven bicycles in inventory at the end of the period. During the year, the bicycles were sold for $675 each.
Instructions:
Calculate the cost of the ending inventory using the FIFO, LIFO, and weighted average cost methods.
Prepare a partial income statement for each inventory costing method showing the sales and the calculation of gross profit on sales.
Assume that the sales and purchases are net amounts.