Concept explainers
Comparing amounts for cost of goods sold, ending inventory, and gross profit-FIFO and LIFO
Assume that Toyland store bought and sold a line of dolls during December as follows:
Dec. 1 | Beginning merchandise inventory | 11 units@ $ 8 each |
8 | Sale | 6 units@$ 21 each |
14 | Purchase | 17 units@$ 15 each |
21 | Sale | 15 units @ $ 21 each |
Requirements
1. Compute the cost of goods sold, cost of ending merchandise inventory, and gross profit using the FIFO inventory costing method.
2. Compute the cost of good s sold, cost of ending merchandise inventory, and gross profit using the LIFO inventory costing method.
3. Which method results in a higher cost of goods sold?
4. Which method results in a higher cost of ending merchandise inventory?
5. Which method results in a higher gross profit?
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