Alta Ski Company's inventory records contained the following information regarding its latest ski model. The company uses a periodic inventory system.
Beginning inventory, January 1, 2018 ................... 600 units @ $80 each
Purchases:
January 15 .................................................... 1,000 units @ $95 each
January 21 .................................................... 800 units @ $100 each
Sales:
January 5 ...................................................... 400 units @ $120 each
January 22 ..................................................... 800 units @ $130 each
January 29 ..................................................... 400 units @ $135 each
Ending inventory, January 31, 2018 ....................... 800 units
Required:
1. Which method, FIFO or LIFO, will result in the highest cost of goods sold figure for January 2018? Why? Which method will result in the highest Ending inventory balance? Why?
2. Compute cost of goods sold for January and the Ending inventory using both the FIFO and LIFO methods.