Discuss the different methods to account for cash discount. Support you answer with examples.

Answer:

During April, the following changes in the single inventory product took place

April 1 Balance 1,400 units @ $24

8 Purchased 900 units @ $36

12 Purchased 700 units @ $30

24 Purchased 400 units @ $50

10 Sold 1,500 units @ $40

26 Sold 1,700 units @ $44

Calculate the COGS after each sales transaction and the ending inventory after each transaction under the following methods.

(a) FIFO.

(b) Average Cost. (round numbers to the nearest 10)

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