E7-12 Alternative Inventory Methods Park Companys perpetual inventory records indicate the following transactions in the month of June:

Units Cost/Unit

Inventory, June 1 200 $3.20

Purchases:

June 3 200 3.50

June 17 250 3.60

June 24 300 3.65

Sales:

June 6 300

June 21 200

June 27 150

Required:

1. Compute the cost of goods sold for June and the inventory at the end of June using each of the following cost flow assumptions:

a. FIFO

b. LIFO

c. Average cost (Round unit costs to 3 decimal places and other amounts to the nearest dollar.)

2. Next Level Why are the cost of goods sold and ending inventory amounts different for each of the three methods? What do these amounts tell us about the purchase price of inventory during the year?

3. Next Level Which method produces the most realistic amount for net income? For inventory? Explain your answer.

4. Next Level If Park uses IFRS, which of the previous alternatives would be acceptable and why?