The following data pertain to Model Q two-wheeled trailers in the inventory of Travel Trailers Equipment Company
Question:
The following data pertain to Model Q two-wheeled trailers in the inventory of Travel Trailers Equipment Company during the year 2019:
Inventory, January 1.........................50 units at $5,240
Purchases:
February 27......................................38 units at $4,660
August 16.........................................46 units at $4,650
November 19....................................34 units at $4,870
Inventory, December 31...................36 units
INSTRUCTIONS
1. Determine the cost of the inventory on December 31 and the cost of goods sold for the year ending on that date under each of the following valuation methods:
(a) FIFO,
(b) LIFO,
(c) Average cost. When using the average cost method, compute the unit cost to the nearest cent.
2. Assume that the net realizable value of each unit on December 31 is $4,850. Using the lower of cost or net realizable value rule, find the inventory amount under each of the methods given in instruction 1.
Analyze: Using the lower of cost or net realizable value rule, which inventory amount will result in the highest net income for the period?
Step by Step Answer:
College Accounting Chapters 1-30
ISBN: 978-1259631115
15th edition
Authors: John Price, M. David Haddock, Michael Farina