Assume the following for the Inventory of XYZ Company: Units 500 Total Cost $5,000 Beginning Inventory Purchases: March 2 July 5 Oct. 2 Goods Available 200 100 200 1000 2400 1400 3000 $11,800 400 units are in Ending Inventory; 600 units have been sold at $25 each. a. Determine the cost of Goods Sold, Ending Inventory and Gross Profit Percentage for each of the following inventory cost flow assumptions: LIFO, FIFO and Average Cost. LIFO FIFO Average Cost A. Cost of Goods Sold $ $ $ B. Ending Inventory % c. Gross Profit Percentage Round to 1/10th of 1% b. In periods of rising prices, which inventory method represents the best cash management tool? Explain your answer. c. Determine the Inventory valuation on the balance sheet after applying the Lower of Cost or Market (LCM) under each of the three costing methods. Assume the net realizable value at year end (amount to be recovered; selling price less disposal cost) has dropped to $13 per unit. If any of the three costing methods requires a write down to LCM specify which method requires the write down and how much the write down is. |