Question

Assume that a retailer’s beginning inventory and purchases of a popular item during January included:
(1) 300 units at $7 in beginning inventory on January 1, (2) 450 units at $8 purchased on January 8, and (3) 750 units at $9 purchased on January 29. The company sold 350 units on January 12 and 550 units on January 30.

Required:
1. Calculate the cost of goods sold for the month of January under (a) FIFO (periodic calculation), (b) FIFO (perpetual calculation), (c) LIFO (periodic calculation), and (d) LIFO (perpetual calculation).
2. Which cost flow assumption would you recommend to management and why? Which calculation approach, periodic or perpetual, would you recommend and why?



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  • CreatedJuly 01, 2014
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