Bristol Sales had the following transactions for DVDs in 2004, its first year of operations.

Jan. 20    Purchased 75 units @ $17 = $1,275

Apr. 21    Purchased 450 units @ $19 = 8,550

July 25    purchased 200 units @ $23 = 4,600

Sept. 19 Purchased 100 units @ $29 = 2,900

During the year, Bristol Sales sold 775 DVDs for 60 each.

a.) Compute the amount of ending inventory Bristol would report on the balance sheet, assuming the following cost flow assumption:

(1) FIFO,

(2) LIFO, and

(3) Weighted average.

b.) Record the above transactions in general journal form and post to T-accounts using

(1) FIFO,

(2) LIFO, and

(3) Weighted average.

Use a separate set of journal entries and T-accounts for each method. Assume all transactions are cash transactions.

c.) Compute the difference in gross margin between the FIFO and LIFO cost flow assumptions.