The following information is related to radios for the Couples Company for the month of July.

Date		Transaction	Units In	Units Cost	Total	Units Sold	Selling Price	Total
July	1	Balance	100	$4.10	$  410
	6	Purchase	800	4.30	3,440
	7	Sale				300	$7.00	$ 2,100
	10	Sale				300	7.30	2,190
	12	Purchase	400	4.51	1,804
	15	Sale				200	7.40	1,480
	18	Purchase	300	4.60	1,380
	22	Sale				400	7.40	2,960
	25	Purchase	500	4.58	2,290
	30	Sale				200	7.50	1,500
		Totals	2,100		$9,324	1,400		$10,230

Instructions:

a. Assuming that the periodic inventory method is used, compute the inventory cost at July 31 under each of the following cost flow assumptions. (Ignore taxes.)

1. FIFO.

2. Weighted-average.

b. Answer the following questions.

1. Which of the methods used above will yield the highest figure for gross profit for the income statement? Explain why.

2. Which of the methods used above will yield the highest figure for ending inventory for the statement of financial position? Explain why.

Answer rating: 100% (QA)

Answer 1 Gross profit is the profit a company makes after deducting the costs associated with making ... View the full answer