(APPENDICES 6A AND 6B) INVENTORY COSTING METHODS Edward’s Company began operations in February 2009. Edward’s accounting records provide the following data for the remainder of 2009 for one of the items the company sells:

Activity Units Purchase Price

(per unit)

Sale Price

(per unit)

Beginning Inventory 9 $ 90 Purchase, Feb. 15 6 100 Purchase, March 22 8 110 Sale, April 9 10 $180 Purchase, May 29 9 120 Sale, July 10 15 180 Purchase, Sept. 10 8 130 Sale, Oct. 15 12 180 Edward’s uses a periodic inventory system. All purchases and sales were for cash.

Required:

. Compute cost of goods sold and the cost of ending inventory using FIFO.

. Compute cost of goods sold and the cost of ending inventory using LIFO.

. Compute cost of goods sold and the cost of ending inventory using the average cost method. (Use four decimal places for per unit calculations and round all other numbers to the nearest dollar.)

. Prepare the journal entries to record these transactions assuming Edward’s chooses to use the FIFO method.

. Which method would result in the lowest amount paid for taxes?

. If you worked Problem 6-55B, compare your results. What are the differences? Be sure to explain why the differences occurred.