Hector Inc. is a retailer operating in British Columbia. Hector uses the perpetual inventory method. All sales returns from customers result in the goods being returned to inventory; the inventory is not damaged. Assume that there are no credit transactions; all amounts are settled in cash. You are provided with the following information for Hector Inc. for the month of January 2010.
Instructions
(a) For each of the following cost flow assumptions, calculate (i) cost of goods sold, (ii) ending inventory, and (iii) gross profit.
(1) LIFO. (2) FIFO. (3) Moving-average-cost.
(b) Compare results for the three cost flow assumptions.