Sea Travel sells motor boats. One of Sea Travels most popular models is the Wing. During the
Question:
On April 28, Sea Travel sold five Wings to the Jack Sport racing team. The remaining seven boats remained in inventory at June 30, the end of Sea Travels fiscal year.
Instructions
a. Compute the cost of goods sold relating to the sale on April 28 and the ending inventory of
Wing boats at June 30, using the following cost flow assumptions:
1. Average cost (round cost to nearest whole dollar).
2. FIFO.
3. LIFO.
Show the number of units and the unit costs of each layer comprising the ending inventory.
You may determine the cost of goods sold by deducting ending inventory from the cost of goods available for sale.
b. If Sea Travel uses the LIFO cost flow assumption for income tax purposes, can it use the FIFO method for financial reporting purposes?Explain.
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 =...
Step by Step Answer:
Financial and Managerial Accounting the basis for business decisions
ISBN: 978-0078111044
16th edition
Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello