Chapter 6, Problem 72BPSB

( Appendices 6A and 6B) Inventory Costing Methods

Edwards Company began operations in February 2019. Edwards accounting records provide the following data for the remainder of 2019 for one of the items the company sells:

 Edwards uses a periodic inventory system. All purchases and sales were for cash.

Required:

1. Compute cost of goods sold and the cost of ending inventory using FIFO.

2. Compute cost of goods sold and the cost of ending inventory using LIFO.

3. Compute cost of goods sold and the cost of ending inventory using the average cost method. ( Note: Use four decimal places for per-unit calculations and round all other numbers to the nearest dollar.)

4. Prepare the journal entries to record these transactions assuming Edwards chooses to use the FIFO method.

5. CONCEPTUAL CONNECTION Which method would result in the lowest amount paid for taxes?

6. CONCEPTUAL CONNECTION Refer to Problem 6-67B and compare your results. What are the differences? Be sure to explain why the differences occurred.