Selbe Inc. is a retailer operating in Edmonton, Alberta. Selbe uses the perpetual inventory method. All sales returns from customers result in the goods being returned to inventory. (Assume that the inventory is not damaged.) Assume that there are no credit transactions; all amounts are settled in cash. You are provided with the following information for Selbe Inc. for the month of January 2010.

Instructions
(a) For each of the following cost flow assumptions, calculate
(i) Cost of goods sold,
(ii) Ending inventory, and
(iii) Gross profit.
(1) LIFO. (Assume sales returns had a cost of $20 and purchase returns had a cost of $24.)
(2) FIFO. (Assume sales returns had a cost of $20 and purchase returns had a cost of $24.)
(3) Moving-average. (Round cost per unit to three decimal places.)
(b) Compare results for the three cost flowassumptions.

Transcribed Image Text:

Unit Cost or Selling Price $20 Date Dec. 31 an. 2 Jan. 6 Jan. 9 Jan. 9 Jan. 10 Jan. 10 Jan. 23 Jan. 30 Description Quantity 160 100 180 10 75 15 50 100 120 8 Ending inventory Purchase Sale Sale return Purchase Purchase return Sale Purchase Sale 24 45 26 50