E6-20

Comparing cost of goods sold and gross profit-FIFO, LIFO, and weighted-average methods Assume that RK Tire Store completed the following perpetual inventory transactions for a line of tires: May 1 Beginning merchandise inventory 24 tires @ $ 61 each 11 Purchase 6 tires @ $ 76 each 23 Sale 16 tires @ $ 89 each 26 Purchase 14 tires @ $ 86 each 29 Sale 17 tires @ $ 89 each Requirements Compute cost of goods sold and gross profit using the FIFO inventory costing method. Compute cost of goods sold and gross profit using the LIFO inventory costing method. Compute cost of goods sold and gross profit using the weighted-average inventory costing method. (Round weighted-average cost per unit to the nearest cent and all other amounts to the nearest dollar.) Which method results in the largest gross profit, and why