Skogmo Inc. is a retail company that uses the perpetual inventory method. All Calculate cost of goods sold, sales returns from customers result in the goods being returned to inventory. (Assume ending inventory, and gross that the inventory is not damaged.) Assume that there are no credit transactions; all profit under LIFO, FIFO, amounts are settled in cash. You have the following information for Skogmo Inc. for the 4 @verage cost under the month of January 2007. perpetual system; compare results.

Unit Cost or BO ea7)

Date Description. Quantity Selling Price Ca January 1 Beginning inventory 40 $12 Gross profit:

January 5 Purchase 100 14 LIFO $1,665 January 8 Sale 75 25 FIFO o7 Zo January 10 Sale return 10 25 Average $1,691 January 15 Purchase 30 18 January 16 Purchase return 5 18 January 20 Sale 90 25 January 25 Purchase 20 20 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 $14 and purchase returns had a cost of $18.)

(2) FIFO. (Assume sales returns had a cost of $14 and purchase returns had a cost of $18.)

(3) Moving-average cost. (Round cost per unit to three decimal places.)

(b) Compare results for the three cost flow assumptions.