Marlow Company, Ltd. had a beginning inventory of 400 units of Product Kimbo
at a cost of £8 per unit. During the year, purchases were:
Feb. 20.................200 units at £9..............Aug. 12.............600 units at £11
May 5.................500 units at £10...............Dec. 8.............300 units at £12
Marlow Company uses a periodic inventory system. Sales totaled 1,500 units.
Instructions
(a) Determine the cost of goods available for sale.
(b) Determine (1) the ending inventory and (2) the cost of goods sold under the two assumed cost flow methods (FIFO and average-cost). Prove the accuracy of the cost of goods sold under the FIFO and average-cost methods.
(c) Which cost flow method results in (1) the lower ending inventory amount for the statement of financial position, and (2) the lower cost of goods sold for the income statement?