The XYZ Company completed the following perpetual inventory transactions: May 1 Beginning inventory 20 units @ $ 61 eachMay 11 purchase 6 units @ $ 76 eachMay 23 sale 16 units @ $ 89 eachMay 26 purchase 14 units @ $ 86 eachMay 29 sale 17 units @ $ 89 eachRequirements1. Calculate cost of goods sold, Cost of ending inventory, and gross profit using LIFO.2. During periods of rising prices, which method (FIFO-LIFO-AVCO) results in the highest gross profit? Why?3. Which method would be more consistent with the matching principle? Why?
The XYZ Company completed the following perpetual inventory transactions: May 1 Beginning inventory 20 units @ $ 61 eachMay 11 purchase 6 units @ $ 76 eachMay 23 sale 16 units @ $ 89 eachMay 26 purchase 14 units @ $ 86 eachMay 29 sale 17 units @ $ 89 eachRequirements1. Calculate cost of goods sold, Cost of ending inventory, and gross profit using LIFO.2. During periods of rising prices, which method (FIFO-LIFO-AVCO) results in the highest gross profit? Why?3. Which method would be more consistent with the matching principle? Why?
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 12E: Alternative Inventory Methods Park Companys perpetual inventory records indicate the following...
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Question
The XYZ Company completed the following perpetual inventory transactions:
May 1 Beginning inventory 20 units @ $ 61 each
May 11 purchase 6 units @ $ 76 each
May 23 sale 16 units @ $ 89 each
May 26 purchase 14 units @ $ 86 each
May 29 sale 17 units @ $ 89 each
Requirements
1. Calculate cost of goods sold, Cost of ending inventory, and gross profit using LIFO.
2. During periods of rising prices, which method (FIFO-LIFO-AVCO) results in the highest gross profit? Why?
3. Which method would be more consistent with the matching principle? Why?
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