Canadian Tire sells soccer balls and uses a perpetual inventory system. Canadian Tires inventory records show that at March 1, there were 50 units on hand at a cost of $15 each. Transactions related to purchase and sale of soccer balls in March were as follows: Per unit Cost 17 $14 Date Mar 2 Transaction Purchase Sale Units Sales price Mar 5 60 $20 Mar 15 Purchase 80 $12 Mar 30 Sale 50 $20 Instructions a. For each of the following cost formulas, calculate the ending inventory as at March 31 and the cost of goods sold for the month of March. i. FIFO ii. Average b. Assume that Canadian Tire is motivated to report the highest profit possible. Which method will they prefer?
Canadian Tire sells soccer balls and uses a perpetual inventory system. Canadian Tires inventory records show that at March 1, there were 50 units on hand at a cost of $15 each. Transactions related to purchase and sale of soccer balls in March were as follows: Per unit Cost 17 $14 Date Mar 2 Transaction Purchase Sale Units Sales price Mar 5 60 $20 Mar 15 Purchase 80 $12 Mar 30 Sale 50 $20 Instructions a. For each of the following cost formulas, calculate the ending inventory as at March 31 and the cost of goods sold for the month of March. i. FIFO ii. Average b. Assume that Canadian Tire is motivated to report the highest profit possible. Which method will they prefer?
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