Express Distribution markets CDs of the performing artist Fishe. At the beginning of October express had in beginning inventory 2,000 of Fishe’s CDs with a unit cost of $7.
During October, Express made the following purchases of Fishe’s CDs.
Oct. 3 2,500 @ $8 ...... Oct. 19 3,000 @ $10
Oct. 9 3,500 @ $9 ...... Oct. 25 4,000 @ $11
During October, 10,900 units were sold. Express uses a periodic inventory system.
(a) Determine the cost of goods available for sale.
(1) The ending inventory
(2) The cost of goods sold under each of the assumed cost flow methods (FIFO, LIFO, and average-cost). Prove the accuracy of the cost of goods sold under the FIFO and LIFO methods.
(c) Which cost flow method results in
(1) The highest inventory amount for the balance sheet
(2) The highest cost of goods sold for the income statement?