Answered: Concord Distribution markets CDs of the…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter7: Inventories: Cost Measurement And Flow Assumptions

Section: Chapter Questions

Problem 8P: Comprehensive The following information for 2019 is available for Marino Company: 1. The beginning...

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Concord Distribution markets CDs of the performing artist Fishe. At the beginning of October, Concord had in beginning inventory 2,500 of Fishe’s CDs with a unit cost of $7. During October, Concord made the following purchases of Fishe’s CDs.

Oct. 3		3,125	@	$8		Oct. 19		3,750	@	$10
Oct. 9		4,375	@	$9		Oct. 25		5,000	@	$11

During October, 13,625 units were sold. Concord uses a periodic inventory system.

Determine the cost of goods available for sale.

Cost of goods available for sale

Calculate weighted average cost per unit. (Round answer to 2 decimal places, e.g. 2.25.)

Weighted average cost per unit

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. (Round answers to 0 decimal places, e.g. 1,250. Use weighted-average unit cost rounded to 2 decimal places for computations.)

	FIFO	LIFO	AVERAGE-COST
The ending inventory	$	$	$
The cost of goods sold	$	$	$

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?

(1)		(FIFO, LIFO, or Average-cost) results in the highest inventory amount, $ ?
(2)		(FIFO, LIFO, or Average-cost) results in the highest cost of goods sold, $ ?

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