Question: How would I work the following problem? Using a periodic system Mower-Blower Sales Co. started business on Jan 20, 2016. Products sold were snow blowers

How would I work the following problem?

Using a periodic system Mower-Blower Sales Co. started business on Jan 20, 2016. Products sold were snow blowers and lawn mowers. Each product sold for $1400. Purchased during 2016 were as follows

Blowers

Mowers

21-Jan

20 x 800

3-Feb

40 x 780

28-Feb

30 x 760

13-Mar

20 x 760

6-Apr

20 x 840

22-May

40 x 860

3-Jun

40 x 880

20-Jun

60 x 920

15-Aug

20 x 860

20-Sep

20 x 840

7-Nov

20 x 800

The December 31, 2016, inventory included 10 blowers and 25 mowers.

Assume the company uses a periodic inventory system.

a. What will be the difference between ending inventory valuation at December 31, 2016, under the FIFO and LIFO cost flow assumptions? (Hint: Compute ending inventory under each method, and then compare results.)

b. If the cost of mowers had increased to $960 each by December 1, and if management had purchased 30 mowers at that time, which cost flow assumption was probably being used by the firm? Explain your answer.

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