Teal Mountain Inc. markets CDs of numerous performing artists. At the beginning of March, Teal Mountain Inc. had in beginning inventory 2,590 CDs with a unit cost of $7. During March, Teal Mountain Inc. made the following purchases of CDs. March 5 1,950 @ $8 March 21 5,240 @ $10 March 13 3,400 @ $9 March 26 1,970 @ $11 During March 11,280 units were sold. Teal Mountain Inc. uses a periodic inventory system. Which cost flow method results in (1) the highest inventory amount for the balance sheet and (2) the highest cost of goods sold for the income statement? (1) Average-costFIFOLIFO produces the highest inventory amount. (2) Average-costFIFOLIFO produces the highest cost of goods sold.
Teal Mountain Inc. markets CDs of numerous performing artists. At the beginning of March, Teal Mountain Inc. had in beginning inventory 2,590 CDs with a unit cost of $7. During March, Teal Mountain Inc. made the following purchases of CDs. March 5 1,950 @ $8 March 21 5,240 @ $10 March 13 3,400 @ $9 March 26 1,970 @ $11 During March 11,280 units were sold. Teal Mountain Inc. uses a periodic inventory system. Which cost flow method results in (1) the highest inventory amount for the balance sheet and (2) the highest cost of goods sold for the income statement? (1) Average-costFIFOLIFO produces the highest inventory amount. (2) Average-costFIFOLIFO produces the highest cost of goods sold.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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