Trade Cars Ltd had opening stock in February of 150 car wheels that cost £77.00 each.

During February, the garage made the following purchases:

Trade Cars Ltd’s closing balance consists of 214 wheels.

Required 

1 Calculate the closing stock and cost of goods sold amounts under the weightedaverage cost (WAC), FIFO and LIFO stock valuation methods.
2 Discuss why cost of goods sold is highest under LIFO. Be specific.
3 How much income tax would Trade Cars Ltd save during February by using LIFO versus FIFO? The income tax rate is 31 percent.

Transcribed Image Text:

Feb. 2 222 @ 79.50 14 95 @ 82.00 19 210 @ 84.00 27 248 @ 87.00