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I am a little lost when it comes to part B2 but if someone can please look over these highlighted boxes/answers for me that would
I am a little lost when it comes to part B2 but if someone can please look over these highlighted boxes/answers for me that would be amazing. Thank you ahead of time!
P6-2A Determine cost of goods sold and ending inventory using FIFO. LIFO and average-cost with analysis Mullins Distribution markets CDs of numerous performing artists. At the beginning of March, Mullins had in beginning inventory 2,500 CDs with a unit cost of $7. During March, Mullins made the following purchases of CDs. March 5 2,000 @ $8 March 21 5,000 @ $10 March 13 3,500 @ $9 March 26 2,000 @ $11 During March 12,000 units were sold. Mullins uses a periodic inventory system. Instructions (a) Determine the cost of goods available of sale. (b) Determine (1) the ending inventory and (2) the cost of goods sold under each of the assumed cost flow methods (FIFO, LIFO, and average-cost). Prove the accuracy of the cost of goods sold under the FIFO and LIFO methods. (Note: For average-cost, round cost per unit to three decimal places.) (c) Which cost flow methods results in (1) the highest inventory amount for the balance sheet and (2) the highest cost of goods sold for the income statement? NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?". Enter a textual answer in the cells with "TEXT." (a) COST OF GOODS AVAILABLE FOR SALE Date Explanation March 1 Beginning inventory 5 Purchase 13 Purchase 21 Purchase 26 Purchase Total Units 2,500 2,000 3,500 5,000 2,000 15,000 Unit Cost $7 8 9 10 11 Total Cost $17,500 $16,000 $31,500 $50,000 $22,000 $137,000 FIFO (b)(1) Ending Inventory Date March 26 21 Units 2,000 1,000 3,000 Unit Cost $11 10 Total Cost $22,000 $10,000 $32,000 (b)(2) Cost of Goods Sold Cost of goods available for sale Less: Ending inventory Cost of goods sold $10.67 12,000 $128,000 Proof of Cost of Goods Sold Date Units March 1 2,500 5 2,000 13 3,500 21 4,000 12,000 Unit Cost $7 8 9 10 Total Cost $17,500 $16,000 $31,500 $40,000 $105,000 LIFO (b)(1) Ending Inventory Date March 1 5 Units 2,500 500 3,000 Unit Cost $7 8 Total Cost $17,500 $4,000 $21,500 (b)(2) Cost of Goods Sold Cost of goods available for sale Less: Ending inventory Cost of goods sold $7.17 12,000 $86,000 Proof of Cost of Goods Sold Date Units March 26 2,000 21 5,000 13 3,500 5 1,500 12,000 Unit Cost $11 10 9 8 Total Cost $22,000 $50,000 $31,500 $12,000 $115,500 AVERAGE COST Cost of goods available for sale $9.63 Units available for sale 3,000 Average cost per unit $28,875 (b)(1) Ending Inventory Units 3,000 Unit Cost $9.13 Total Cost $27,400.00 (b)(2) Cost of Goods Sold Cost of goods available for sale Less: Ending inventory Cost of goods sold $3,000 12,000 $4.00 (c) (1) As shown in (b), FIFO produces the highest inventory amount, $32,000 (c) (2) As shown in (b), LIFO produces the highest cost of goods sold, $115,500 After you have completed P6-2A, consider the following additional question. 1. Assume that number of units sold changed to 10,000 units. How does this change impact ending inventory and cost of goods sold under FIFO, LIFO and Average costStep by Step Solution
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