Glanville Distribution markets CDs of the performing artist Harrilyn Clooney. At

Question

Glanville Distribution markets CDs of the performing artist Harrilyn Clooney. At the beginning of March, Glanville had in beginning inventory 1,500 Clooney CDs with a unit cost of $7. During March Glanville made the following purchases of Clooney CDs.
March 5 3,000 @ $8 March 21 4,000 @ $10
March 13 5,500 @ $9 March 26 2,000 @ $11

During March 12,500 units were sold. Glanville uses a periodic inventory system.




Determine the cost of goods available for sale.
$ ________




Determine (1) the ending inventory and (2) the cost of goods sold under each of the assumed cost flow methods (FIFO, LIFO, and average-cost). Prove the accuracy of the cost of goods sold under the FIFO and LIFO methods. (Round answers to 0 decimal places, e.g. 125.)

FIFO LIFO Average Cost
Ending Inventory $ ___ $ ___ $ ____
Cost of Goods Sold $ ___ $ ___ $ ____





Which cost flow method results in (1) the highest inventory amount for the balance sheet and (2) the highest cost of goods sold for the income statement?

Highest inventory amount: (with the options Average Cost, FIFO, LIFO)

Highest cost of goods sold: (with the options Average Cost, FIFO, LIFO)

Explanation / Answer

March 1 1,500 @ $7; $10,500 March 5 3,000 @ $8; $24,000 March 13 5,500 @ $9; $49,500 March 21 4,000 @ $10; $40,000 March 26 2,000 @ $11; $22,000 Total 16,000 units; $146,000; Ave. cost $9.125 Sold 12,500 units Ending inventory 3500 units FIFO 2,000 @ $11; $22,000 1,500 @ $10; $15,000 Ending inventory 3,500 units; $37,000 (highest balance sheet amount) COGS $146,000 - $37,000 = $109,000 LIFO 1,500 @ $7; $10,500 2,000 @ $8; $16,000 Ending inventory 3,500 units; $26,500 COGS $146,000 - $26,500 = $119,500 (highest COGS) Average Cost Ending inventory 3,500 units @ $9.125; $31,937.50 rounded to $31,938. COGS $146,000 - $31,938 = $114,062

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