Question

Greg’s Bicycle Shop has the following transactions related to its top-selling Mongoose mountain bike for the month of March.

Required:
1. Calculate ending inventory and cost of goods sold at March 31, using the specific identification method. The March 5 sale consists of bikes from beginning inventory, the March 17 sale consists of bikes from the March 9 purchase, and the March 27 sale consists of four bikes from beginning inventory and eight bikes from the March 22 purchase.
2. Using FIFO, calculate ending inventory and cost of goods sold at March 31.
3. Using LIFO, calculate ending inventory and cost of goods sold at March 31.
4. Using weighted-average cost, calculate ending inventory and cost of goods sold at March 31.
5. Calculate sales revenue and gross profit under each of the four methods.
6. Comparing FIFO and LIFO, which one provides the more meaningful measure of ending inventory? Explain.
7. If Greg’s Bicycle Shop chooses to report inventory using LIFO instead of FIFO, record the LIFO adjustment.

Date
Transactions
Units
Unit Cost
Total Cost
March
1
Beginning inventory
20
$250
$ 5,000
March 5
Sale ($400 each)
15
March 9
Purchase
10
270
2,700
March 17
Sale ($450 each)
8.
March 22
Purchase
10
280
2,800
March 27
Sale ($475 each)
12
March 30
2,700
$13,200
Purchase
300
Expand
Transcribed Image Text

Date Transactions Units Unit Cost Total Cost March 1 Beginning inventory 20 $250 $ 5,000 March 5 Sale ($400 each) 15 March 9 Purchase 10 270 2,700 March 17 Sale ($450 each) 8. March 22 Purchase 10 280 2,800 March 27 Sale ($475 each) 12 March 30 2,700 $13,200 Purchase 300

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