### Inventory Cost Flow Methods**Scenario:** Three identical units of merchandise were purchased during July as follows:- **Date:** July 3 - **Units Purchased:** 1 - **Cost per Unit:** $20.00- **Date:** July 13 - **Units Purchased:** 1 - **Cost per Unit:** $23.00- **Date:** July 24 - **Units Purchased:** 1 - **Cost per Unit:** $26.00**Average Cost per Unit Calculation:**- **Total Cost:** $69.00- **Average Cost per Unit:** $23.00**Sales Assumptions:**- One unit sells on July 28 for $34.00.**Tasks:**- Determine the **gross profit**, **cost of merchandise sold**, and **ending inventory** on July 31 using: - (a) **First-In, First-Out (FIFO)** - (b) **Last-In, First-Out (LIFO)** - (c) **Average Cost****Details to be Filled:**1. **First-In, First-Out (FIFO):** - **Gross Profit:** $______ - **Cost of Merchandise Sold:** $______ - **Ending Inventory:** $______2. **Last-In, First-Out (LIFO):** - **Gross Profit:** $______ - **Cost of Merchandise Sold:** $______ - **Ending Inventory:** $______3. **Average Cost Method:** - **Gross Profit:** $______ - **Cost of Merchandise Sold:** $______ - **Ending Inventory:** $______### Explanation:This problem helps students understand how different inventory costing methods impact financial statements. Each method provides a distinct perspective on cost flow and profit calculation. - **FIFO:** Assumes the earliest goods purchased are the first to be sold.- **LIFO:** Assumes the last goods purchased are the first to be sold.- **Average Cost:** Uses the weighted average cost of all units available.By analyzing these methods, one gains insights into their effects on profitability and inventory valuation.

Name: ### Inventory Cost Flow Methods**Scenario:** Three identical units of
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Description: ### Inventory Cost Flow Methods**Scenario:** Three identical units of merchandise were purchased during July as follows:- **Date:** July 3 - **Units Purchased:** 1 - **Cost per Unit:** $20.00- **Date:** July 13 - **Units Purchased:** 1 - **Cost

FIFO stands for First In First Out LIFO stands for Last In First Out

Answered: %24 %24 %24 %24 Cost of Merchandise…

Business

Accounting

%24 %24 %24 %24 Cost of Merchandise Gross Profit Ending Inventory Sold a) First-in, first-out $4 $4 b) Last-in, first-out c) Average 24

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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