Exercise 8-16 (Algo) Comparison of FIFO and LIFO; periodic system [LO8-1, 8-4] Alta Ski Company's inventory records contained the following information regarding its latest ski model. The company uses a periodic inventory system. Beginning inventory, January 1, 2021 1,350 units @ $100 each Purchases: January 15 2,800 units @ $115 each January 21 Sales: 2,600 units @ $120 each January 5 January 22 January 29 Ending inventory, January 31, 2021 1,300 units @ $140 each 1,700 units @ $150 each 1,150 units @ $155 each 2,600 units Required: 1a. Which method, FIFO or LIFO, will result in the highest cost of goods sold figure for January 2021? 1b. Which method will result in the highest ending inventory balance? 2. Compute cost of goods sold for January and the ending inventory using both the FIFO and LIFO methods. 3a. Assume that inventory costs were declining during January. The inventory purchased on January 15 had a unit cost of $90, and the inventory purchased on January 21 had a unit cost of $85. All other information is the same. Which method, FIFO or LIFO, will result in the highest cost of goods sold figure for January 2021? 3b. Which method will result in the highest ending inventory balance? 3c. Compute cost of goods sold for January and the ending inventory using both the FIFO and LIFO methods. Required: 1a. Which method, FIFO or LIFO, will result in the highest cost of goods sold figure for January 2021? 1b. Which method will result in the highest ending inventory balance? 2. Compute cost of goods sold for January and the ending inventory using both the FIFO and LIFO methods. 3a. Assume that inventory costs were declining during January. The inventory purchased on January 15 had a unit cost of $90, and the inventory purchased on January 21 had a unit cost of $85. All other information is the same. Which method, FIFO or LIFO, will result in the highest cost of goods sold figure for January 2021? 3b. Which method will result in the highest ending inventory balance? 3c. Compute cost of goods sold for January and the ending inventory using both the FIFO and LIFO methods. Compute cost of goods sold for January and the ending inventory using both the FIFO and LIFO methods. Req 1A and 1B Req 2 Req 3A and 3B Req 3C Which method, FIFO or LIFO, will result in the highest cost of goods sold figure for January 2021 and highest ending inventory balance? 1a. Highest cost of goods sold figure 1b. Highest ending inventory balance < Req 1A and 1B Req 2 > Req 1A and 1B Req 2 Req 3A and 3B Req 3C Compute cost of goods sold for January and the ending inventory using both the FIFO and LIFO methods. Cost of Goods Available for Sale Cost of Goods Sold - Periodic FIFO Ending Inventory - Periodic FIFO FIFO # of units Cost per unit Cost of Goods #of units Available for # of units sold Cost per unit Cost of Goods Sold Cost per in ending unit Ending Inventory Sale inventory Beginning Inventory 1,350 $100 $ 135,000 $ 100 $ 100 Purchases: January 15 2,800 $ 115 322,000 $ 115 January 21 Total 2,600 $ 120 6,750 312,000 $ 120 $ 115 S 120 $ 769,000 Cost of Goods Available for Sale Cost of Goods Sold - Periodic LIFO Ending Inventory - Periodic LIFO LIFO # of units Cost per unit Cost of Goods # of units Available for # of units Cost per sold unit Cost of Goods Sold Sale in ending inventory Cost per Ending unit Inventory Beginning Inventory 1,350 $100 $ 135,000 $ 100 $ 100 Purchases: January 15 2,800 $ 115 322,000 $ 115 January 21 Total 2,600 6,750 $ 120 312,000 $ 120 69 69 $ 115 $ 120 $ 769,000 < Req 1A and 1B Req 3A and 3B > 3b. Which method will result in the highest ending inventory balance? 3c. Compute cost of goods sold for January and the ending inventory using both the FIFO and LIFO methods. Compute cost of goods sold for January and the ending inventory using both the FIFO and LIFO methods. Req 1A and 1B Req 2 Req 3A and 3B Req 3C Assume that inventory costs were declining during January. Which method, FIFO or LIFO, will result in the highest cost of goods sold figure for January 2021 and highest ending inventory balance? . Highest cost of goods sold figure 3b. Highest ending inventory balance < Req 2 Req 3C > -FIFO Compute cost of goods sold for January and the ending inventory using both the FIFO and LIFO methods. Cost of Goods Available for Sale Inventory Balance - Periodic FIFO Cost of Goods Sold - Periodic FIFO FIFO: # of units Cost per unit Cost of Goods Available for Sale # of units Cost per unit Cost of Goods Sold # of units in ending Cost per Ending unit Inventory sold $ Beg. Inventory 1,350 $ 135,000 $ 100.00 inventory $ 100.00 100.00 Purchases: January 15 2,800 90.00 252,000 January 21 2,600 85.00 221,000 90.00 85.00 90.00 85.00 Total 6,750 $ 608,000 Cost of Goods Available for Sale Cost of Goods Sold - Periodic Inventory Balance - Periodic LIFO -LIFO LIFO LIFO: # of units Cost per unit Cost of Goods Available for Sale # of units sold Cost per unit Cost of Goods Sold # of units in ending inventory Cost per unit Ending Inventory $ Beg. Inventory 1,350 $ 135,000 $ 100.00 $ 100.00 100.00 Purchases: January 15 2,800 90.00 252,000 January 21 2,600 85.00 221,000 90.00 85.00 90.00 85.00 Total 6,750 $ 608,000 < Req 3A and 3B Req 3C >