Vaughn Distribution markets CDs of the performing artist Unique. At the beginning of October, Vaughn had in beginning inventory 2,000 of Unique’s CDs with a unit cost of $5. During October, Vaughn made the following purchases of Unique’s CDs. Oct. 3 2,500 @ $6 Oct. 19 3,000 @ $8 Oct. 9 3,500 @ $7 Oct. 25 4,000 @ $9 During October, 10,850 units were sold. Vaughn uses a periodic inventory system. Determine the cost of goods available for sale. Cost of goods available for sale $109500 Calculate cost per unit. (Round answer to 2 decimal places, e.g. 2.25.) Cost per unit $_ Determine (1) the ending inventory and (2) the cost of goods sold under each of the assumed cost flow methods (FIFO, LIFO, and average-cost). (Round answers to 0 decimal places, e.g. 1,250.) FIFO LIFO AVERAGE-COST The ending inventory $ $ $ The cost of goods sold $ $ $ 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) FIFO produces the highest inventory amount, $ . (2) LIFO produces the highest cost of goods sold, $_ .

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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Vaughn Distribution markets CDs of the performing artist Unique. At the beginning of October, Vaughn had in beginning inventory 2,000 of Unique’s CDs with a unit cost of $5. During October, Vaughn made the following purchases of Unique’s CDs.

Oct. 3		2,500	@	$6		Oct. 19		3,000	@	$8
Oct. 9		3,500	@	$7		Oct. 25		4,000	@	$9

During October, 10,850 units were sold. Vaughn uses a periodic inventory system.

Determine the cost of goods available for sale.

Cost of goods available for sale

$109500

Calculate cost per unit. (Round answer to 2 decimal places, e.g. 2.25.)

Cost per unit

$_______________

Determine (1) the ending inventory and (2) the cost of goods sold under each of the assumed cost flow methods (FIFO, LIFO, and average-cost). (Round answers to 0 decimal places, e.g. 1,250.)

	FIFO	LIFO	AVERAGE-COST
The ending inventory	$____________	$____________	$____________
The cost of goods sold	$____________	$____________	$____________

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)		FIFO produces the highest inventory amount, $______________ .
(2)		LIFO produces the highest cost of goods sold, $_____________ .

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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