Calculate COGS Ending Inventory Gross Profit With FIFO LIFO And WAM
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Question
Wave Riders Surfboard Company began business on January 1 of the current year. Purchases of surfboards were as follows:
|
1/3: |
100 boards @ $125 |
|
3/17: |
50 boards @ $130 |
|
5/9: |
246 boards @ $140 |
|
7/3: |
400 boards @ $150 |
|
10/23: |
74 boards @ $160 |
Wave Riders sold 710 boards at an average price of $250 per board. The company uses a periodic inventory system.
Instructions
a. Calculate cost of goods sold, ending inventory, and gross profit under each of the following inventory valuation methods:
- First-in, first-out
- Last-in, first-out
- Weighted average
b. Which of the three methods would be chosen if management’s goal is to
(1) produce an up-to-date inventory valuation on the balance sheet?
(2) show the lowest net income for tax purposes?
Total Word Count 80
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