Golden Eagle Company began operations on April 1 by selling a single product. Data on purchases and sales for the year are as follows: Purchases: Units Purchased Total Cost Date Unit Cost April 6 May 18 $1,134,600 $36.60 31,000 1,287,000 33,000 39.00 June 6 40,000 39.60 1,584,000 July 10 August 10 40,000 42.00 1,680,000 27,200 42.75 1,162,800 October 25 12,800 43.50 556,800 November 4 8,000 44.85 358,800 December 10 384,000 8,000 48.00 200,000 $8,148,000 Sales: April 16,000 units May 16,000 June 20,000 July 24,000 August 28,000 September 28,000 October 18,000 November 10,000 December 8,000 Total units 168,000 Total sales $10,000,000 The president of the company, Connie Kilmer, has asked for your advice on which inventory cost flow method should be used for the 32,000-unit physical inventory that was taken on December 31. The company plans to expand its product line in the future and uses the periodic inventory system. Write a brief memo to Ms. Kilmer comparing and contrasting the LIFO and FIFO inventory cost flow methods and their potential impacts on the company's financial statements.

Golden Eagle Company began operations on April 1 by selling a single product. Data on purchases and sales for the year are as follows: Purchases: Units Purchased Total Cost Date Unit Cost April 6 May 18 $1,134,600 $36.60 31,000 1,287,000 33,000 39.00 June 6 40,000 39.60 1,584,000 July 10 August 10 40,000 42.00 1,680,000 27,200 42.75 1,162,800 October 25 12,800 43.50 556,800 November 4 8,000 44.85 358,800 December 10 384,000 8,000 48.00 200,000 $8,148,000 Sales: April 16,000 units May 16,000 June 20,000 July 24,000 August 28,000 September 28,000 October 18,000 November 10,000 December 8,000 Total units 168,000 Total sales $10,000,000 The president of the company, Connie Kilmer, has asked for your advice on which inventory cost flow method should be used for the 32,000-unit physical inventory that was taken on December 31. The company plans to expand its product line in the future and uses the periodic inventory system. Write a brief memo to Ms. Kilmer comparing and contrasting the LIFO and FIFO inventory cost flow methods and their potential impacts on the company's financial statements.

Financial Accounting

15th Edition

ISBN:9781337272124

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter7: Inventories

Section: Chapter Questions

Problem 4CP: Golden Eagle Company began operations on April 1 by selling a single product. Data on purchases and...

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