P6-2A Determine cost of goods sold and ending inventory sing FIFO. LIFO, and average-cost with analysis Express Distribution markets CDs of the performing artist Fishe. At the beginning of October, Express had in beginning inventory.000 of Fishe's CDs with a unit cost of $7. During October, Express made the following purchases of Fishe's CDs Oct 3 2,500 @ 88 Oct. 19 3,000 @ $10 Oct. 9 3,500 a 9 Oct. 25 4,000 $11 During October, 10,900 units were sold. Express uses a periodic inventory system. a Instructions (a) Determine the cost of goods available for 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. Which cost flow method 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 "?" (c) a (a) Total Cost Date Oct 1 3 9 19 25 COST OF GOODS AVAILABLE FOR SALE Explanation Units Unit Cost Beginning inventory Value Valuc Purchase Value Value Purchase Value Value Purchase Value Value Purchase Value Value Total 2 (b) (1) FIFO Date Date Date Ending Inventory Units Unit Cost Value Value Value Value Total Cost ? ? (b) (2) Cost of Goods Sold Cost of goods available for sale Less: Ending inventory Cost of goods sold Value Value Total Cost Date Date Date Proof of Cost of Goods Sold Units Unit Cost Value Value Value Value Value Value Value Value ? Date Date (b) (1) LIFO Total Cost Date Date Date Ending Inventory Units Unit Cost Value Value Value Value (b) (2) Cost of Goods Sold Cost of goods available for sale Less: Ending inventory Cost of goods sold Value Value Total Cost Date Date Date Date Date Proof of Cost of Goods Sold Units Unit Cost Value Value Value Value Value Value Value Value ? (b) (1) AVERAGE COST Total cost Total units available Average cost *Round to two decimal points Value Value ? Units Value Ending Inventory Unit Cost Value Total Cost Value Cost of Goods Sold Cost of goods available for sale Less: Ending inventory Cost of goods sold Value Value After you have completed the requirements of P6-2A, consider these additional questions Answers are on the other tab in this file. 1. Suppose that the number of units sold increased to 12,000. What is the impact on ending inventory and cost of goods sold if the FIFO method is used? 2. Suppose that the number of units sold increased to 12,000. What is impact on ending inventory and cost of goods sold if the LIFO method is used? 3. Suppose that the number of units sold increased to 12,000. What is the impact on ending inventory and cost of goods sold if the average cost method is used
