Assume that RK Tire Store completed the following perpetual inventory transactions for a line of tires:
May 1Beginning merchandise inventory....24 tires @ $ 61 each
11 Purchase................ 6 tires @ $ 76 each
23 Sale...................16 tires @ $ 89 each
26 Purchase................14 tires @ $ 86 each
29 Sale ..................17 tires @ $ 89 each
Requirements
1. Compute cost of goods sold and gross profit using the FIFO inventory costing method.
2. Compute cost of goods sold and gross profit using the LIFO inventory costing method.
3. Compute cost of goods sold and gross profit using the weighted-average inventory costing method.
4. Which method results in the largest gross profit, and why?