ABC, a grocery company, uses a periodic inventory system. They have the following information for the month of January:
Beginning inventory Jan 1: 400 units @ $10 each
- Purchases Jan 10: 300 units @$12 each
- Jan 15: 200 units @$15 each
- Sales Jan 5: 200 units @ $15 each
- Jan 12: 200 units @ $20 each
- Jan 18: 100 units @ $25 each
- Ending inventory Jan 31: 400 units
1) Will LIFO or FIFO generate the highest cost of goods sold? Why? Show all calculations.
2) Will the ending inventory balance will be higher under LIFO or FIFO? Why? Show all calculations.
3) What is the cost of goods sold under LIFO? Show all calculations.
4) What is the cost of goods sold under FIFO? Show all calculations.