Alta Ski Company's inventory records contained the following information regarding its latest ski model. The company uses a periodic inventory system. 550 units @ $65 each 1,200 units @ $80 each 1,000 units @ $85 each Beginning inventory, January 1, 2021 Purchases: January 15 January 21 Sales: January 5 January 22 January 29 Ending inventory, January 31, 2021 500 units @ $105 each 900 units @ $115 each 350 units @ $120 each 1,000 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 $55, and the inventory purchased on January 21 had a unit cost of $50. 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. Which method, FIFO or LIFO, will result in the highest cost of goods sold figure for January 2021 and highest ending inventory balance? 1a. Highest cost of goods sold figure 16. Highest ending inventory balance FIFO Cost of Goods Available for Sale Cost per Cost of Goods # of units Available for unit Sale 550 $ 65 $ 35,750 Cost of Goods Sold - Periodic FIFO # of units Cost per Cost of sold unit Goods Sold Ending Inventory - Periodic FIFO # of units Cost per in ending Ending unit Inventory inventory 65 $ 0 $ $ 65 $ Beginning Inventory Purchases: January 15 January 21 Total 80 $ 80 $ 80 0 1,200 $ 1,000 $ 2,750 96,000 85,000 216,750 $ $ 85 85 0 $ $ 85 $ 0 $ 0 0 $ 0 Cost of Goods Sold - Periodic LIFO LIFO Cost of Goods Available for Sale Cost Cost of Goods # of units per Available for unit Sale 550 $ 65 $ 35,750 # of units sold Cost per unit Cost of Goods Sold Ending Inventory - Periodic LIFO # of units Cost per Ending in ending unit Inventory inventory $ 65 $ $ 65 $ 0 Beginning Inventory Purchases: January 15 January 21 Total 80 80 $ 80 1,200 $ 1,000 $ 2,750 96,000 85,000 216,750 $ $ 85 85 $ 85 0 $ 0 $ 0 0 $ 0 Assume that inventory costs were declining during January. Which method, FIFO or LIFO, will result in the highest cost of goods sold figure for January 2021 and highest ending inventory balance? 3a. Highest cost of goods sold figure Highest ending inventory balance 3b. Compute cost of goods sold for January and the ending inventory using both the FIFO and LIFO methods. Inventory Balance - Periodic FIFO Cost of Goods Available for Sale - FIFO Cost of # of Cost per Goods units unit Available for Sale 550 $ 65.00 $ 35,750 Cost of Goods Sold - Periodic FIFO # of Cost per units Cost of unit Goods Sold FIFO: # of units in ending inventory Cost per Ending Inventory sold unit $ 65.00 $ 65.00 $ 0 Beg. Inventory Purchases: January 15 January 21 Total 55.00 55.00 0 1,200 1,000 2,750 66,000 50,000 $ 151,750 55.00 50.00 50.00 0 50.00 0 $ 0 0 $ 0 Cost of Goods Sold - Periodic LIFO Inventory Balance - Periodic LIFO LIFO: Cost of Goods Available for Sale -LIFO Cost of # of Cost per Goods units unit Available for Sale 550 $ 65.00 $ 35,750 # of units sold Cost per unit Cost of Goods Sold # of units in ending inventory Cost per unit Ending Inventory $ 65.00 $ 65.00 $ 0 Beg. Inventory Purchases: January 15 January 21 Total 55.00 55.00 55.00 0 1,200 1,000 2,750 50.00 66,000 50,000 $ 151,750 50.00 0 50.00 0 $ 0 0 0
