E7-14 Analyzing and Interpreting the Effects of the LIFO/FIFO Choice on Inventory Turnover Ratio [LO 7-2, LO 7-3, LO 7-5]

Simple Plan Enterprises uses a periodic inventory system. Its records showed the following:

Inventory, December 31, using FIFO 50 Units @ $20 = $1,000

Inventory, December 31, using LIFO 50 Units @ $16 = $800

Transactions in the Following Year	Units			Unit Cost			Total Cost
Purchase, January 9		62		$	21			1,302
Purchase, January 20		112			22			2,464
Sale, January 11, (at $44 per unit)		92
Sale, January 27 (at $45 per unit)		68

Required:
1.	Compute the number and cost of goods available for sale, the cost of ending inventory, and the cost of goods sold under FIFO and LIFO.

2.	Compute the inventory turnover ratio under the FIFO and LIFO inventory costing methods. (Round your answers to 2 decimal places.)

3.

The inventory method used does make a significant difference in the inventory turnover ratio.

	Yes
	No