Please just answer question 3 **Inventory Principles**1. **Shepherd Cycles used the FIFO inventory method in 2010. Shepherd Cycles plans to continue using the FIFO method in future years.** A. Which inventory principle is most relevant to Shepherd’s decision? *Enter answer here.*2. **Shepherd Cycles does not expect prices to change dramatically and wants to use a method that averages price changes.** B. Which inventory method would best meet Shepherd’s goal? *Enter answer here.* C. What if Shepherd wanted to expense out the newer purchases of goods instead? Which inventory would best meet that need? *Enter answer here.*3. **Refer to the information below that shows Boston Cycles’ inventory data for the year ending December 31, 2011. Answer the following questions:** - Assume that the ending inventory was accidentally overstated by $2,200. *Enter answer here.* - What are the correct amounts for cost of goods sold and gross profit? *Enter answer here.*---**Inventory Data for Boston Cycles**- **Sales Revenue:** $46,000- **Cost of Goods Sold:** - Beginning Inventory: $5,400 - Net Purchases: $26,700 - **Cost of Goods Available:** $32,100 - Less: Ending Inventory: ($3,600) - **Cost of Goods Sold:** $28,500- **Gross Profit:** $17,500

3. Refer to the information below that shows Boston Cycles' inventory data for the year ending December 31, 2011. Answer the following questions: Assume that the ending inventory was accidentally overstated by $2,200. Enter answer here. What are the correct amounts for cost of goods sold and gross profit? Enter answer here. Main Description Secondary Description Amount Sales revenue $46,000 Cost of goods sold: Beginning inventory $5,400 Net purchases $26,700 Cost of goods available $32,100| Less: Ending inventory ($3,600) Cost of goods sold $28,500 Gross profit $17,500

3. Refer to the information below that shows Boston Cycles' inventory data for the year ending December 31, 2011. Answer the following questions: Assume that the ending inventory was accidentally overstated by $2,200. Enter answer here. What are the correct amounts for cost of goods sold and gross profit? Enter answer here. Main Description Secondary Description Amount Sales revenue $46,000 Cost of goods sold: Beginning inventory $5,400 Net purchases $26,700 Cost of goods available $32,100| Less: Ending inventory ($3,600) Cost of goods sold $28,500 Gross profit $17,500

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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