Financial Accounting Problem 6-8A (P6-8A) Vasquez Ltd. is a retailer operating i

Question

Financial Accounting

Problem 6-8A (P6-8A) Vasquez Ltd. is a retailer operating in Edmonton, Alberta. Vasquez uses the perpetual inventory method. All sales returns from customers result in the goods being returned to inventory; the inventory is not/ damaged. Assume that there are no credit transactions; all amounts are settled in cash.You are provided with the following information for Vasquez Ltd. for the month of January 2008.
Date/Description/Quantity/Unit Cost or Selling Price
December 31/Ending inventory/150/$17
January 2/Purchase/ 100/21
January 6/Sale/150/40
January 9/Sale return/10/40
January 9/Purchase/75/24
January 10/Purchase return/15/24
January 10/Sale/50/45
January 23/Purchase/100/28
January 30/Sale/110/50

Instructions
(a) For each of the following cost flow assumptions, calculate (i) cost of goods sold, (ii) ending inventory, and (iii) gross profit. (1) LIFO. (2) FIFO. (3) Moving-average-cost
(b) Compare results to three cost flow assumptions

Check: Gross Profit FIFO $6,330; LIFO $7,500; Average $7,090

Explanation / Answer

Problem 6-8A (P6-8A) Vasquez Ltd. is a retailer operating in Edmonton, Alberta. Vasquez uses the perpetual inventory method. All sales returns from customers result in the goods being returned to inventory; the inventory is not/ damaged. Assume that there are no credit transactions; all amounts are settled in cash.You are provided with the following information for Vasquez Ltd. for the month of January 2008.

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