Information for Swan Valley Company is presented in P6-3B. Assume the same inventory data and that the company uses a perpetual inventory system. Ignore the inventory difference from P6-3B part (c).
Instructions
(a) Calculate the cost of goods sold and the ending inventory at June 30 using FIFO.
(b) Prepare the journal entries to record the June 25 sale.
(c) If the company changes from FIFO to weighted average and prices continue to rise, would you expect the cost of goods sold and ending inventory amounts to be higher or lower than these amounts?
Taking It Future:
If Swan Valley Company wishes to change from FIFO to the weighted average cost formula, what factors must it consider before making this change?