Alta Ski Company\'s inventory records contained the following information regard

Question

Alta Ski Company's inventory records contained the following information regarding its latest ski model. The company uses a periodic inventory system. Beginning inventory, January 1, 2013 500 units@$60 each Purchases: January 15 1,100 units@$75 each January 21 900 units @ $ 80 each Sales: January 5 450 units @$100 each January 22 850 units@$110 each January 29 300 units @$115 each Ending inventory, January 31, 2013 900 units Required: 1.1 Which method, FIFO or LIFO, will result in the highest cost of goods sold figure for January 2013? LIFO or FIFO 1.2 Which method will result in the highest ending inventory balance? FIFO or LIFO 2.Compute cost of goods sold for January and the ending inventory using both the FIFO and LIFO methods.

Explanation / Answer

FIFO- (7000*38=266000)= Revenue COGS= (1000*20)+(6000*22)=152000Gross Margin = 266000-152000=144000 Balance Sheet Inventory= (1000*22)+(2000*23)=68000 LIFO Revenue= 266000COGS = (2000*23)+(5000*22)=156000 Gross Margin=110000 Balance Sheet Inventory= 64000

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