Name

FINANCIAL ACCOUNTING

Inventory Costing Case

On January $1,2022,$ Chris Columbus decided to start a new business, Ahoy Mates, that sells children's toy boats. Each

boat is sold for $$24.$ The following purchases were made during $2022.$

Ahoy Mates uses a periodic inventory system and has $325$ items remaining in inventory. At December $31,$ Ahoy Mates is

trying to determine which inventory costing method he should use.

Answer the following questions to help Ahoy Mates determine which method he will adopt for his new business.

How many items did Ahoy Mates purchase in $2022?$

What is the cost of goods purchased by Ahoy Mates in $2022?$

How many items remain in Ahoy Mates inventory as of December $31?$

How many items did Ahoy Mates sell in $2022?$

What was Ahoy Mates total sales amount in $2022?$

Answer the following questions assuming Ahoy Mates uses the weighted average inventory costing method.

a$.$ What is the weighted average cost per unit?

$($Round to nearest penny$)$

b$.$ What is the value of the ending inventory?

c$.$ What is the cost of goods sold?

d$.$ What is the gross profit?

Answer the following questions assuming Ahoy Mates uses the first in$,$ first out $($FIFO$)$ inventory costing method.

a$.$ What is the value of the ending inventory?

b$.$ What is the cost of goods sold?

c$.$ What is the gross profit?

Answer the following questions assuming Ahoy Mates uses the last in$,$ first out $($LIFO$)$ inventory costing method.

a$.$ What is the value of the ending inventory?

b$.$ What is the cost of goods sold?

c$.$ What is the gross profit?

Which method do you recommend and WHY?