Effects of FIFO and Weighted Average}

Sheepskin Company sells to colleges and universities a special paper that is used for diplomas. Sheepskin typically makes one purchase of the special paper each year on January 1. Assume that Sheepskin uses a perpetual inventory system. You have the following data for the three years ended in 2018:

Required:
1. What would the ending inventory and cost of goods sold be for each year if FIFO is used?
2. What would the ending inventory and cost of goods sold be for each year if weighted average is used?
3. CONCEPTUAL CONNECTION For each year, explain the cause of the differences in cost of goods sold under FIFO and weighted average.
\section*{Exercise

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2016 Beginning inventory Purchases Sales 2017 Beginning inventory Purchases Sales 2018 Beginning inventory Purchases Sales 0 pages 10,000 pages at $1.60 per page 8,500 pages 1,500 pages 16,200 pages at $2.00 per page 15,000 pages 2,700 pages 18,000 pages at $2.50 per page 20,100 pages