Crandall Distributors uses a perpetual inventory system and has the following data available for inventory, purchases, and

Question:

Crandall Distributors uses a perpetual inventory system and has the following data available for inventory, purchases, and sales for a recent year:

Required:
1. Compute the cost of ending inventory and the cost of goods sold using the specific identification method. Assume the ending inventory is made up of 40 units from beginning inventory, 30 units from purchase 1, 80 units from purchase 2, and 40 units from purchase 3.
2. Compute the cost of ending inventory and cost of goods sold using the FIFO inventory costing method.
3. Compute the cost of ending inventory and cost of goods sold using the LIFO inventory costing method.
4. Compute the cost of ending inventory and cost of goods sold using the average cost inventory costing method.
5. Compare the ending inventory and cost of goods sold computed under all four methods. What can you conclude about the effects of the inventory costing methods on the balance sheet and the income statement?

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...