E8.11(LO3)(Compute FIFO and Average-CostPeriodic)The following information is related to radios for the Couples Company for the month of July.

Date Transaction Units In Units Cost Total Units Sold Selling Price Total

July1 Balance 100 $4.10 $ 410

6 Purchase 800 4.30 3,440

7 Sale 300 $7.00 $2,100

10 Sale 300 7.30 2,190

12 Purchase 400 4.51 1,804

15 Sale 200 7.40 1,480

18 Purchase 300 4.60 1,380

22 Sale 400 7.40 2,960

25 Purchase 500 4.58 2,290

30 Sale 200 7.50 1,500

Totals 2,100 $9,324 1,400 $10,230

Instructions

a.Assuming that the periodic inventory method is used, compute the inventory cost at July 31 under each of the following cost flow assumptions. (Ignore taxes.)

1.FIFO.

2.Weighted-average.

b.Answer the following questions.

1.Which of the methods used above will yield the highest figure for gross profit for the income statement? Explain why.

2.Which of the methods used above will yield the highest figure for ending inventory for the statement of financial position? Explain why.