### Learning Objectives**Learning Objectives 2, 3****2. Ending Merch. Inv. $73**#### Inventory ExerciseAssume that Toys Galore store bought and sold a line of dolls during December as follows:| Date | Description | Units ||--------------|---------------------------------|-----------------------|| Dec. 1 | Beginning merchandise inventory | 13 units @ $9 each || Dec. 8 | Sale | 8 units @ $22 each || Dec. 14 | Purchase | 16 units @ $14 each || Dec. 21 | Sale | 14 units @ $22 each |#### Requirements1. **FIFO Method**: Compute the cost of goods sold, cost of ending merchandise inventory, and gross profit using the FIFO (First-In, First-Out) inventory costing method. 2. **LIFO Method**: Compute the cost of goods sold, cost of ending merchandise inventory, and gross profit using the LIFO (Last-In, First-Out) inventory costing method.3. **Comparison Questions**: - Which method results in a higher cost of goods sold? - Which method results in a higher cost of ending merchandise inventory? - Which method results in a higher gross profit?#### Details for Graphs and DiagramsSince there are no graphs or diagrams included in this content, there is no additional explanation needed for those elements.

The value of the ending inventory is affected by the inventory valuation method. According to FIFO,…

Assume that Toys Galore store bought and sold a line of dolls during December as follows: Dec. 1 Beginning merchandise inventory 8 Sale 14 Purchase 21 Sale 13 units @ $9 each 8 units @ $22 each 16 units @ $ 14 each 14 units @ $ 22 each

Assume that Toys Galore store bought and sold a line of dolls during December as follows: Dec. 1 Beginning merchandise inventory 8 Sale 14 Purchase 21 Sale 13 units @ $9 each 8 units @ $22 each 16 units @ $ 14 each 14 units @ $ 22 each

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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Assume that J R Toys store purchased and sold a line of dolls during December as follows: (Click the icon to view the transactions.) JR Toys uses the perpetual inventory system. More info Dec. 1 Beginning merchandise inventory 8 Sale 14 Purchase 21 Sale 13 7 14 13 units @ $ 8 each units @ $18 each units @ $ 16 each units @ $ 18 each. - X 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 goods 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?
Required information Trey Monson starts a merchandising business on December 1 and enters into the following three inventory purchases. Also, on December 15, Monson sells 25 units for $25 each. Purchases on December 7. 15 units @ $10.00 cost 30 units @ $15.00 cost 25 units @ $18.00 cost Purchases on December 14 Purchases on December 21 Required: Monson sells 25 units for $25 each on December 15. Of the units sold, 12 are from the December 7 purchase and 13 are from the December 14 purchase. Monson uses a perpetual inventory system. Determine the costs assigned to the December 31 ending inventory when costs are assigned based on specific identification.