The Johnson Watch Company had 300 watches in its July | inventory. The company uses the periodic inventory system and made the following purchases of watches during July and August.

July 8 40 watches for $20 each 27 100 watches for $21 each Aug. 18 50 watches for $22 each 24 60 watches for $23 each Sales during July and August were 200 watches and 150 watches, respectively. The FIFO, the average, and the LIFO costs of the watches in the July | inventory were $19, $18, and $13, respectively.

Required: (1) Compute the ending inventory and the cost of goods sold for each month if the company uses the following:

(a) The FIFO cost flow assumption

(b) The average cost flow assumption

(c) The LIFO cost flow assumption

(2) Which cost flow assumption provides the most realistic balance sheet amount for ending inventory? Why? Which provides the most realistic measure of income? Why?

 TYK-1