Best Buy uses weighted-average cost, Amazon uses FIFO, and Target uses LIFO. As you will see from the hypothetical example below, the use of a different inventory costing method will lead to differences in income statements and balance sheets. Best Buy, Amazon and Target sell a popular T-shirt for $20. Lets assume that all three companies have the same sale and inventory purchase pattern for the same period. Beginning inventory: 20,000 @ $4.00 Purchases: 30,000 @ $5.00 Ending inventory: 10,000.

What is cost of goods sold, gross profit and cost of ending inventory for Best Buy using the weighted-average inventory costing method?

What is cost of goods sold, gross profit and cost of ending inventory for Amazon using the FIFO inventory costing method?

What is cost of goods sold, gross profit and cost of ending inventory for Target using the LIFO inventory costing methodWhich company has the highest gross profit (profitability) simply due to its choice of accounting inventory method?

Which company will save the most on income taxes? (hint: the less income you report, the less income taxes you pay)