During its first year of operation, Krempna Company purchased 2,800 units of a product at $42 per unit. During the second year, it purchased 3,000 units of the same product at $48 per unit. During the third year, it purchased 2,500 units at $60 per unit. In each year, it had an ending inventory of 500 units. Krempna uses the periodic inventory system.
Prepare cost of goods sold statements that compare the value of ending inventory and the cost of goods sold for each of the three years using
(1) The FIFO inventory costing method
(2) The LIFO method. From the resulting data, what conclusions can you draw about the relationships between the changes in unit price and the changes in the value of ending inventory?

  • CreatedSeptember 10, 2014
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