Textbook Problem

Inventory Costing Methods

Ein Company began operations in February 2019. Ein’s accounting records provide the following data for the remainder of 2019 for one of the items the company sells:

Ein uses a perpetual inventory system. All purchases and sales were for cash.

Required:

1. Compute cost of goods sold and the cost of ending inventory using FIFO.

2. Compute cost of goods sold and the cost of ending inventory using LIFO.

3. Compute cost of goods sold and the cost of ending inventory using the average cost method. ( Note: Use four decimal places for per-unit calculations and round all other numbers to the nearest penny.)

4. Prepare the journal entries to record these transactions assuming Ein chooses to use the FIFO method.

5. CONCEPTUAL CONNECTION Which method would result in the lowest amount paid for taxes?