Chapter 6, Problem P6A.32APGA

To determine

Concept Introduction:

Periodic Inventory System: The periodic inventory system records and updates the inventory at the end of a particular period. The inventory balance is not updated after each transaction and it is updated periodically.

FIFO method: FIFO Stands for First In First Out. Under this method, the units purchased first are assumed to be sold first and cost of goods sold is calculated accordingly. The ending inventory in the method includes the latest units purchased.

LIFO method: LIFO Stands for Last In First Out. Under this method, the latest units purchased are assumed to be sold first and cost of goods sold is calculated accordingly. The ending inventory in the method includes the oldest units purchased.

Weighted Average method: Under this method, the cost per unit of the inventory is calculated as weighted average cost per unit and the cost of goods sold and inventory is calculated with the help of weighted average cost per unit.

Requirement-1:

To Determine: The Ending inventory and Cost of Goods sold amount using the FIFO, LIFO, and Weighted Average methods under Periodic inventory system

To determine

Requirement-2:

To Calculate: The Gross Profit for each method under Periodic inventory system

To determine

Requirement-3:

To identify: The method for lowest and highest net income