Paddington Gifts made purchases of a particular product in the current year as follows:

Required:
The business uses a periodic inventory system. Ending inventory consists of 120 units. Calculate the costs to be assigned to the Ending inventory and to goods sold under:
a. FIFO
b. A weighted average cost basis
Which method provides the lower net income and why?

Transcribed Image Text:

Jan. 1 Beginning inventory. 240 units6.00 Mar. 7 Purchased...ueusrein...500 units $5.60 July 28 Purchased 1.000 units @ $5.00 e $4.40 1,440 2,800 5,000 $13,200