1. The George Costanza Retail Store had a beginning inventory on January 1st of

Question

1. The George Costanza Retail Store had a beginning inventory on January 1st of 100 units of Product. SXL at a cost of $20 per unit. During the year, the following purchases were made. March 15th 300 units $24 per unit July 20th 200 units $25 per unit Sept 4th 300 units $ 28 per unit Dec 2nd 100 units $30 per unit 850 units were sold during the year. The George Costanza Retail store uses a perpetual inventory system Questions: 1. Determine the Cost of Goods Available For Sale 2. Determine the following: a. The ending inventory b. The cost of goods sold under each of the cost flow assumption methods (FIFO. LIFO, Average Costing) 3. Explain which cost flow method results in the highest inventory amount for the balance sheet and the highest cost of goods sold for the income statement.

Explanation / Answer

Hi, if you like my answer please rate me lifesaver first. 1) Cost of Goods available for sale = $(20 * 100 +24*300+25*200+28*300+30*100) = $25600 2) LIFO Cost of goods sold = $(24*250+25*200+28*300+30*100) = $22400 Ending Inventory = $(20*100 + 24*50) = $3200 FIFO Cost of goods sold = $(20*100 + 24*300+25*200+28*250) = $21200 Ending Inventory = $(28*50 + 30*100) = $4400 Average Costing avg cost = $(20 * 100 +24*300+25*200+28*300+30*100)/(1000) = $25.6 Cost of goods sold = $25.6 *850= $21760 Ending Inventory = $25600-$21760 = $3840 3) FIFO results in highest inventory amount while LIFO results in highest cost of goods sold since the inventory cost is increasing throughout the year.

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.