Big Fish Tackle Co. Ltd. reports the following inventory transactions for its fishing rods for the month of April. The company uses a perpetual inventory system.

Date		Explanation	Units	Unit Cost/Price	Total Cost
Apr.	1	Beginning inventory	50	$230	$11,500
	6	Purchases	35	240	8,400
	9	Sales	(55)	350
	14	Purchases	40	245	9,800
	20	Sales	(50)	360
	28	Purchases	30	250	7,500

Instructions

1. Using FIFO, determine the cost of goods sold and the cost of ending inventory.
2. Record journal entries for the sales transactions on April 9 and April 20.
3. Assume that Big Fish Tackle wants to change to the average cost formula. Explain what guidelines the company must consider before making this change.
4. If the company does change to the average cost formula and prices continue to rise, explain whether you expect the cost of goods sold and ending inventory amounts to be higher or lower than these amounts when using FIFO.