The XYZ Company completed the following perpetual inventory transactions: May 1 Beginning inventory 20 units @ $ 61 each May 11 purchase 6 units @ $ 76 each May 23 sale 16 units @ $ 89 each May 26 purchase 14 units @ $ 86 each May 29 sale 17 units @ $ 89 each Requirements Calculate cost of goods sold, Cost of ending inventory, and gross profit using LIFO. of rising prices, which method (FIFO-LIFO-AVCO) results in the highest gross profit? Why? Which method would be more consistent with the matching principle? Why?
The XYZ Company completed the following perpetual inventory transactions: May 1 Beginning inventory 20 units @ $ 61 each May 11 purchase 6 units @ $ 76 each May 23 sale 16 units @ $ 89 each May 26 purchase 14 units @ $ 86 each May 29 sale 17 units @ $ 89 each Requirements Calculate cost of goods sold, Cost of ending inventory, and gross profit using LIFO. of rising prices, which method (FIFO-LIFO-AVCO) results in the highest gross profit? Why? Which method would be more consistent with the matching principle? Why?
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter6: Cost Of Goods Sold And Inventory
Section: Chapter Questions
Problem 24CE: Inventory Costing: Average Cost Refer to the information for Filimonov Inc. and assume that the...
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Question
The XYZ Company completed the following perpetual inventory transactions:
May 1 |
Beginning inventory |
20 units @ $ 61 each |
May 11 |
purchase |
6 units @ $ 76 each |
May 23 |
sale |
16 units @ $ 89 each |
May 26 |
purchase |
14 units @ $ 86 each |
May 29 |
sale |
17 units @ $ 89 each |
|
|
|
Requirements
- Calculate cost of goods sold, Cost of ending inventory, and gross profit using LIFO. of rising prices, which method (FIFO-LIFO-AVCO) results in the highest gross profit? Why?
- Which method would be more consistent with the matching principle? Why?
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