Anderson's Department Store has the following data for inventory, purchases and sales of merchandise for December:

Anderson uses a perpetual inventory system. All purchases and sales were for cash.

Required:
1. Compute cost of goods sold and the cost of ending inventory using FIFO. (Use two decimal places for all calculations and answers.)
2. Compute cost of goods sold and the cost of ending inventory using LIFO. (Use two decimal places for all calculations and answers.)
3. Compute cost of goods sold and the cost of ending inventory using the average cost method. (Use four decimal places for per unit calculations and round all other numbers to two decimal places.)
4. Prepare the journal entries to record these transactions assuming Anderson chooses to use the FIFO method.
5. Which method would result in the lowest amount paid fortaxes?

Transcribed Image Text:

Purchase Price (per unit) $6.00 6.40 7.00 Sale Price (per unit) Activity Units Beginning Inventory Purchase, Dec. 2 Purchase, Dec. 5 Sale, Dec. 7 Sale, Dec. 10 Purchase Dec. 12 Sale, Dec. 14 16 20 13 15 $12.00 12.00 7.50 18 12.00