Gavin Products uses a periodic inventory system. For 2008 and 2009, Gavin has the following data: All

Question:

Gavin Products uses a periodic inventory system. For 2008 and 2009, Gavin has the following data:

All purchases and sales are for cash.

Required:
1. Compute cost of goods sold, the cost of ending inventory, and gross margin for each year using FIFO.
2. Compute cost of goods sold, the cost of ending inventory, and gross margin for each year using LIFO.
3. Compute cost of goods sold, the cost of ending inventory, and gross margin for each year using the average cost method. (Use four decimal places for per unit calculations and round all other numbers to the nearest dollar.)
4. Which method would result in the lowest amount paid for taxes?
5. Which method produces the most realistic amount for income? For inventory? Explain your answer.
6. What is the effect of purchases made later in the year on the gross margin when LIFO is employed? When FIFO is employed? Be sure to explain why any differences occur.
7. If you worked Problem 6-56A, compare your answers. What are the differences? Be sure to explain why any differencesoccurred.

Ending Inventory
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula Ending Inventory Formula =...