Purchases and sales data for the first three years of a firm’s operation were as follows (purchases are listed in order of acquisition):

Required:

(a) Prepare a schedule showing the number of units on hand at the end of each year.

(b) Compute the year-end stocks for each of the three years using (i) FIFO, (ii) LIFO, (iii)
average cost.

(c) Calculate the gross profit for each of the three years based on (i) FIFO, (ii) LIFO and (iii)
weighted average.

(d) Which method of stock valuation do you consider the most appropriate? Why?

Transcribed Image Text:

19X8 19X9 20X0 Sales 12,000 units @ 50 15,000 units @ 60 18,000 units @ 65 Purchases 4,000 units @ 22 5,500 units @ 32 7,000 units @ 40 6,000 units @ 25 6,000 units @ 34 4,500 units @ 43 5,000 units @30 4,000 units @ 37 5,000 units @ 45