Richie's Tennis Shop has the following transactions related to its top-selling Wilson tennis racket for the month of August. Richie's Tennis Shop uses a periodic inventory system. Date August 1 August 4 August 11 August 13 August 20 August 26 August 29 Purchase Transactions Beginning inventory Sale ($130 each) Purchase Sale ($145 each) Purchase Sale ($155 each) Units 8 5 10 8 10 11 11 Unit Cost $141 131 121 111 Total Cost $1,128 1,310 1,210 1,221 $4,869 For the specific identification method, the August 4 sale consists of rackets from beginning inventory, the August 13 sale consists of rackets from the August 11 purchase, and the August 26 sale consists of one racket from beginning inventory and 10 rackets from the August 20 purchase. Required: 1. Calculate ending inventory and cost of goods sold at August 31, using the specific identification method. 2. Using FIFO, calculate ending inventory and cost of goods sold at August 31. 3. Using LIFO, calculate ending inventory and cost of goods sold at August 31.

Richie's Tennis Shop has the following transactions related to its top-selling Wilson tennis racket for the month of August. Richie's Tennis Shop uses a periodic inventory system. Date August 1 August 4 August 11 August 13 August 20 August 26 August 29 Purchase Transactions Beginning inventory Sale ($130 each) Purchase Sale ($145 each) Purchase Sale ($155 each) Units 8 5 10 8 10 11 11 Unit Cost $141 131 121 111 Total Cost $1,128 1,310 1,210 1,221 $4,869 For the specific identification method, the August 4 sale consists of rackets from beginning inventory, the August 13 sale consists of rackets from the August 11 purchase, and the August 26 sale consists of one racket from beginning inventory and 10 rackets from the August 20 purchase. Required: 1. Calculate ending inventory and cost of goods sold at August 31, using the specific identification method. 2. Using FIFO, calculate ending inventory and cost of goods sold at August 31. 3. Using LIFO, calculate ending inventory and cost of goods sold at August 31.

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Description: Richie's Tennis Shop has the following transactions related to its top-selling Wilson tennis racket for the month of August.Richie's Tennis Shop uses a periodic inventory system.DateAugust 1August 4August 11August 13August 20August 26August 29Transa

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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Concept explainers

Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.

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Question

Richie's Tennis Shop has the following transactions related to its top-selling Wilson tennis racket for the month of August.
Richie's Tennis Shop uses a periodic inventory system.
Date
August 1
August 4
August 11
August 13
August 20
August 26
August 29
Transactions
Beginning inventory
Sale ($130 each)
Purchase
Sale ($145 each)
Purchase
Sale ($155 each)
Purchase
Units
8
5
10
8
10
11
11
Unit Cost
$141
131
121
111
Total Cost
$1,128
1,310
1,210
1,221
$4,869
For the specific identification method, the August 4 sale consists of rackets from beginning inventory, the August 13 sale
consists of rackets from the August 11 purchase, and the August 26 sale consists of one racket from beginning inventory and
10 rackets from the August 20 purchase.
Required:
1. Calculate ending inventory and cost of goods sold at August 31, using the specific identification method.
2. Using FIFO, calculate ending inventory and cost of goods sold at August 31.
3. Using LIFO, calculate ending inventory and cost of goods sold at August 31.
4. Using weighted-average cost, calculate ending inventory and cost of goods sold at August 31.
5. Calculate sales revenue and gross profit under each of the four methods.
6. Comparing FIFO and LIFO, which one provides the more meaningful measure of ending inventory?
7. If Richie's chooses to report inventory using LIFO, record the LIFO adjustment.

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