Alta Ski Company’s inventory records contained the following information regarding its latest ski model. The company uses a periodic inventory system. Beginning inventory, January 1, 2021600units @ $80 eachPurchases:January 151,000units @ $95 eachJanuary 21800units @ $100 eachSales:January 5400units @ $120 eachJanuary 22800units @ $130 eachJanuary 29400units @ $135 eachEnding inventory, January 31, 2021800units1a. Which method, FIFO or LIFO, will result in the highest cost of goods sold figure for January 2021?1b. Which method will result in the highest ending inventory balance?2. Compute the cost of goods sold for January and the ending inventory using both the FIFO and LIFO methods. Cost of Goods Available for SaleCost of Goods Sold - Periodic FIFOEnding Inventory - Periodic FIFOCost of GoodsAvailable forSale# of unitsin endinginventoryFIFOCost perunitCost perunitCost perunit# of unitsCost ofGoods SoldEndingInventory# of unitssoldBeginning Inventory600 $80$48,000$80$80$Purchases:January 151,000 $9595,0009595January 2180010080,000$100$100Total2,400$223,000$$Cost of Goods Available for SaleCost of Goods Sold - Periodic LIFOEnding Inventory - Periodic LIFOCost of GoodsAvailable forSale# of unitsin endinginventoryLIFOCost perCost perunitCost perunitEndingInventory# of unitsCost ofGoods Sold# of unitsunitsoldBeginning Inventory600$80$48,000$80 $$80Purchases:January 151,000 $9595,000$95$95January 21800$ 10080,000$100$100Total2,400$223,000$$%24

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Description: Alta Ski Company’s inventory records contained the following information regarding its latest ski model. The company uses a periodic inventory system. Beginning inventory, January 1, 2021600units @ $80 eachPurchases:January 151,000units @ $95 each

Using periodic system, no records of inventory is made time to time. It is on periodic basis that…

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Alta Ski Company’s inventory records contained the following information regarding its latest ski model. The company uses a periodic inventory system.


Beginning inventory, January 1, 2021	600	units @ $80 each
Purchases:
January 15	1,000	units @ $95 each
January 21	800	units @ $100 each
Sales:
January 5	400	units @ $120 each
January 22	800	units @ $130 each
January 29	400	units @ $135 each
Ending inventory, January 31, 2021	800	units

1a. Which method, FIFO or LIFO, will result in the highest cost of goods sold figure for January 2021?
1b. Which method will result in the highest ending inventory balance?
2. Compute the cost of goods sold for January and the ending inventory using both the FIFO and LIFO methods.

Cost of Goods Available for Sale
Cost of Goods Sold - Periodic FIFO
Ending Inventory - Periodic FIFO
Cost of Goods
Available for
Sale
# of units
in ending
inventory
FIFO
Cost per
unit
Cost per
unit
Cost per
unit
# of units
Cost of
Goods Sold
Ending
Inventory
# of units
sold
Beginning Inventory
600 $
80
$
48,000
$
80
$
80
$
Purchases:
January 15
1,000 $
95
95,000
95
95
January 21
800
100
80,000
$
100
$
100
Total
2,400
$
223,000
$
$
Cost of Goods Available for Sale
Cost of Goods Sold - Periodic LIFO
Ending Inventory - Periodic LIFO
Cost of Goods
Available for
Sale
# of units
in ending
inventory
LIFO
Cost per
Cost per
unit
Cost per
unit
Ending
Inventory
# of units
Cost of
Goods Sold
# of units
unit
sold
Beginning Inventory
600
$
80
$
48,000
$
80 $
$
80
Purchases:
January 15
1,000 $
95
95,000
$
95
$
95
January 21
800
$ 100
80,000
$
100
$
100
Total
2,400
$
223,000
$
$
%24

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