Date Number of Rings Purchased Cost Per Ring Total Cost
1-Feb 4 $1,000 $4,000
1-Apr 6 $1,100 $6,600
1-May 8 $1,100 $8,800
1-Jun 8 $1,150 $9,200
1-Aug 6 $1,175 $7,050
1-Oct 10 $1,200 $12,000
1-Nov 9 $1,175 $10,575
1-Dec 7 $1,150 $8,050
58 $66,275
Beginning Inventory 10
Rings Available for Sale 60
You own a jewelry store and you sell nothing but black diamond rings. As of January 1st, you had 10 rings in stock at a cost of $1,000 each. You sold 60 rings during the year. You made several purchases over the fiscal year, which ended on December 31st.
1. What was the dollar amount for ending inventory using FIFO, LIFO, and average cost methods?
2. What is the impact on the balance sheet when using different methods of accounting for inventory?
3. Why would a company select one method of accounting for inventory over another?