Kyoto Distribution markets CDs of the performing artist A. A. Bondy. At the beginning of March, Kyoto

Question:

Kyoto Distribution markets CDs of the performing artist A. A. Bondy. At the beginning of March, Kyoto had in beginning inventory 1,500 Bondy CDs with a unit cost of $7. During March Kyoto made the following purchases of Bondy CDs.

March 5 3,000 @ $8 March 21 4,000 @ $10

March 13 5,500 @ $9 March 26 2,000 @ $11

During March 12,500 units were sold. Kyoto uses a periodic inventory system.

Instructions

(a) Determine the cost of goods available for sale.

(b) Determine (1) the ending inventory and (2) the cost of goods sold under each of the assumed cost flow methods (FIFO, LIFO, and average-cost). Prove the accuracy of the cost of goods sold under the FIFO and LIFO methods.

(c) Which cost flow method results in (1) the highest inventory amount for the balance sheet and (2) the highest cost of goods sold for the income statement?

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