April 1 Beginning Inventory 50 units @ $204

10 Purchase 100 units @ $220

17 Sale 90 units

30 Ending Inventory 60 units

May 2 Purchase 100 units @ $216

14 Purchase 50 units @ $224

22 Purchase 60 units @ $234

30 Sale 200 units

31 Ending Inventory 70 units

Use the data provided, but assume that the company uses the perpetual inventory system. (Hint: In preparing the solutions, it is helpful to determine the balance of inventory after each transaction).

1) Determine the cost of ending inventory and cost of goods sold for April and May using the average-cost method. (Round unit costs to the nearest cent).

2) Determine the cost of ending inventory and cost of goods sold for April and May using the FIFO method.

3) Determine the cost of ending inventory and cost of cost of goods sold for April and May using the LIFO method.

4) Business Application: Assume that this company grows for many years in a long period of rising prices. How realistic do you think the balance sheet value for inventory would be and what effect would it have on the inventory turnover ratio?