Assume that BR Tire Store completed the following perpetual inventory transactions for a line of tires:

May 1 Beginning merchandise inventory 28 tires @ $70 each

May 11 Purchase 7 tires @ $80 each

May 23 Sale 14 tires @ $89 each

May 26 Purchase 21 tires @ $82 each

May 29 Sale 25 tires @ $89 each

Requirement 1. Compute cost of goods sold and gross profit using the FIFO inventory costing method. What is the gross profit using FIFO?

Begin by computing the cost of goods sold and cost of ending merchandise inventory using the FIFO inventory costing method. Enter the transactions in chronological order, calculating new inventory on hand balances after each transaction. Once all of the transactions have been entered into the perpetual record, calculate the quantity and total cost of merchandise inventory purchased, sold, and on hand at the end of the period. (Enter the oldest inventory layers first.)

Requirement 2. Compute cost of goods sold and gross profit using the LIFO inventory costing method. What is the gross profit using LIFO?

Requirement 3. Compute cost of goods sold and gross profit using the weighted-average inventory costing method. What is the gross profit using weighted-average?

Requirement 4. Which method results in the largest gross profit and why?

The ____(FIFO/LIFO/Weighted)_____ Method results in the largest gross profit because during times of _______(increasing/decreasing)_________ inventory prices, this method will produce the _____(lowest/highest)____ cost of goods sold.