Instructions

Determine the cost of the inventory on December 31, 20Y7, by the first-in, first-out method. Present data in columnar form, using the following headings:

Model

Quantity

Unit Cost

Total Cost

If the inventory of a particular model comprises one entire purchase plus a portion of another purchase acquired at a different unit cost, use a separate line for each purchase.

1. Determine the cost of the inventory on December 31, 20Y7, by the last-in (LIFO), first-out (FIFO) method, following the procedures indicated in (1).

2. Determine the cost of the inventory on December 31, 20Y7, by the average cost method, using the columnar headings indicated in (1).

3. Discuss which method (FIFO or LIFO) would be preferred for income tax purposes in periods of (a) rising prices and (b) declining prices.

Details regarding the inventory of appliances on January 1, 20Y7, purchases invoices during the year, and the inventory count on December 31,20Y7, of Amsterdam Appliances are summarized as follows: Details regarding the inventory of appliances on January 1, 20Y7, purchases invoices during the year, and the inventory count on December 31,20Y7, of Amsterdam Appliances are summarized as follows