Assume that Sea Travel uses a periodic inventory system. (Refer to the data that precede Problem 8.2B.)
Instructions
a. Compute the cost of goods sold relating to the sale on April 28 and the ending inventory of Wing boats at June 30, using the following cost flow assumptions:
1. Average cost (round cost to nearest whole dollar).
2. FIFO.
3. LIFO.
Show the number of units and the unit costs of each layer comprising the ending inventory. You may determine the cost of goods sold by deducting ending inventory from the cost of goods available for sale.
b. If Sea Travel uses the LIFO cost flow assumption for income tax purposes, can it use the FIFO method for financial reporting purposes? Explain.
Sea Travel sells motor boats. One of Sea Travel's most popular models is the Wing. During the current year, Sea Travel purchased 12 Wings at the following costs:

On April 28, Sea Travel sold five Wings to the Jack Sport racing team. The remaining seven boats remained in inventory at June 30, the end of Sea Travel's fiscal year.

Transcribed Image Text:

Units U Total Purchased Cost Cost Purchase Date Apr. 1 Apr. 19 May 8 $8,000 $ 32,000 ,200 41,000 8,500 25,500 $98,500 12