Answered: Teal Mountain Inc. markets CDs of…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter4: Job Order Costing

Section: Chapter Questions

Problem 6EA: Logo Gear purchased $2,250 worth of merchandise during the month, and its monthly income statement...

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Teal Mountain Inc. markets CDs of numerous performing artists. At the beginning of March, Teal Mountain Inc. had in beginning inventory 2,590 CDs with a unit cost of $7. During March, Teal Mountain Inc. made the following purchases of CDs.

March 5		1,950		@		$8		March 21		5,240		@		$10
March 13		3,400		@		$9		March 26		1,970		@		$11

During March 11,280 units were sold. Teal Mountain Inc. uses a periodic inventory system.

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)		Average-costFIFOLIFO produces the highest inventory amount.
(2)		Average-costFIFOLIFO produces the highest cost of goods sold.

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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