Assume the company uses a periodic inventory system. Refer to P10.2. Data from Trail Bikes, Inc.s perpetual

Question:

Assume the company uses a periodic inventory system.

Refer to P10.2.

Data from Trail Bikes, Inc.â€™s perpetual inventory records for a tire it produces and sells follow:

The company sold 53,000 tires during the year at $ 20 each.
Required
A. Compute the cost of the ending inventory and the cost of goods sold using both FIFO and LIFO.
B. In your opinion, which of the two methods is a better representation of the balance sheet value for the inventory? Why?
C. What is the gross margin using each method?
D. Which method do you think is more representative of the firmâ€™s income? Why?

Ending Inventory
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula Ending Inventory Formula =... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...