Alta Ski Company's inventory records contained the following information regarding its latest ski model. The company uses a periodic inventory system. 850 units $95 each 1,800 units @ $110 each 1,600 units @ $115 each Beginning inventory, January 1, 2021 Purchases: January 15 January 21 Sales: January 5 January 22 January 29 Ending inventory, January 31, 2021 800 units @ $135 each 1,200 units @ $145 each 650 units @ $150 each 1,600 units Required: 1a. Which method, FIFO or LIFO, will result in the highest cost of goods sold figure for January 2021? 1b. Which method will result in the highest ending inventory balance? 2. Compute cost of goods sold for January and the ending inventory using both the FIFO and LIFO methods. 3a. Assume that inventory costs were declining during January. The inventory purchased on January 15 had a unit cost of $85, and the inventory purchased on January 21 had a unit cost of $80. All other information is the same. Which method, FIFO or LIFO, will result in the highest cost of goods sold figure for January 2021? 3b. Which method will result in the highest ending inventory balance? 3c. Compute cost of goods sold for January and the ending inventory using both the FIFO and LIFO methods. Compute cost of goods sold for January and the ending inventory using both the FIFO and LIFO methods. Cost of Goods Sold - Periodic FIFO Ending Inventory - Periodic FIFO FIFO Cost of Goods Available for Sale Cost of Cost # of Goods per units Available unit for Sale 850 $ 95 $ 80,750 Cost # of units sold Cost per unit Cost of Goods Sold # of units in ending inventory Ending Inventory per unit Beginning Inventory 800 $ 95 $ 76,000 50 $ 95 $ 4,750 Purchases: 1,800 $ 110 198,000 1,800 $ 110 198,000 1,800 X $ 110 198,000 January 15 January 21 Total 1,600 $ 115 1,600 $ 115 $ 115 184,000 462,750 184,000 $ 458,000 1,600 3,450 184,000 $ 386,750 4,250 $ 4,200 Cost of Goods Sold - Periodic LIFO Ending Inventory - Periodic LIFO LIFO Cost of Goods Available for Sale Cost of Cost # of Goods per units Available unit for Sale 850 $ 95 $ 80,750 Cost # of units sold Cost per unit Cost of Goods Sold # of units in ending inventory Ending Inventory per unit 850 $ 95 $ 80,750 50 X $ 95 $ 4,750 Beginning Inventory Purchases: 1,800 198,000 1,800 X $ 110 1,800 X $ 110 January 15 January 21 $ 110 $ 115 1,600 $ 115 600 X $ 198,000 184,000 $ 462,750 1,600 4,250 115 184,000 462,750 198,000 69,000 $ 271,750 Total $ 4,250 2,450 Compute cost of goods sold for January and the ending inventory using both the FIFO and LIFO methods. Cost of Goods Available for Sale - FIFO Cost of Goods Sold - Periodic FIFO Inventory Balance - Periodic FIFO FIFO: Cost Cost # of units Cost per unit Cost of Goods Available for Sale # of units sold Cost of Goods Sold # of units in ending inventory Ending Inventory per unit per unit Beg. Inventory 850 $ 95.00 $ 80,750 850 $ 95.00 $ 80,750 50 $ 95.00 $ 4,750 Purchases: 1,800 85.00 153,000 1,800 85.00 1,800 X 85.00 January 15 January 21 80.00 80.00 1,600 1,600 4,250 80.00 153,000 128,000 $ 361,750 128,000 $ 361,750 1,600 X 4,250 153,000 128,000 $ 285,750 Total 3,450 Cost of Goods Sold - Periodic LIFO Inventory Balance - Periodic LIFO LIFO: Cost Cost Cost of Goods Available for Sale - LIFO Cost of Cost # of Goods units per Available unit for Sale $ 850 $ 80,750 95.00 # of units sold Cost of Goods Sold # of units in ending inventory Ending Inventory per unit per unit Beg. Inventory 850 $ 95.00 $ 80,750 50 $ 95.00 $ 4,750 Purchases: 85.00 153,000 1,800 X 85.00 1,800 x 85.00 153,000 January 15 January 21 Total 1,800 1,600 4,250 80.00 80.00 128,000 $ 361,750 80.00 153,000 128,000 $ 361,750 1,600 4,250 1,850 $ 157,750
