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. 4 5 6 March 5 2,000 @ 58 March 21 5,000 @ S10 March 13 3,500 @ 9 March 26 2,000 @ $11 7. During March 12,000 units were sold. Mullins uses a periodic inventory syster. 8 9 Instructions 10 a) Determine the cost of goods available of sale. 11 (6) Determine (1) the ending inventory and (2) the cost of goods sold under each of the assumed cost 12 flow methods (FIFO, LIFO, and average-cost). Prove the accuracy of the cost of goods sold under the 13 FIFO and LIFO methods. (Note: For average-cost, round cost per unit to three decimal places.) 14 (c) Which cost flow methods results in (1) the highest inventory amount for the balance sheet and (2) 15 the highest cost of goods sold for the income statement? NOTE: Enter formulas (whenever possible) or numbers in the highlighted cells with a "?". Cells labeled "DATE" should 16 have a date. Cells labeled "TEXT" should have an inventory method (ie. LIFO) 18 19 20 @ Units Unit Cost 2 Total Cost NNN 2 ? COST OF GOODS AVAILABLE FOR SALE Date Explanation March 1 Beginning inventory 5 Purchase 13 Purchase 21 Purchase 2 ? 2 24 ? ? 25 ? 2 2 ? 2 ? 26 26 Purchase 2 27 Total 2 ? 28 29 30 FIFO 31 (1) 32 Ending Inventory Dede DATE DATE 33 Units ? 7 Unit Cost 2 Total Cost 2 2 34 ? 35 ? 2 36 37 (X2) 38 2 Cost of Goods Sold Cost of goods available for sale Las Ending inventory Cost of goods sold 39 40 2 P6-2A + A F D E 37 (b)(2) 38 B Cost of Goods Sold Cost of goods available for sale Less: Ending inventory Cost of goods sold ? 2 39 40 2 41 42 43 Proof of Cost of Goods Sold Date DATE Total Cost Unit Cost ? 44 2 45 DATE Units ? ? ? ? ? 2 46 DATE 2 ? 47 DATE 2 48 49 50 51 LIFO 52 (b)(1) Ending Inventory Date 53 Units Unit Cost 54 DATE ? ? Total Cost 2 ? 55 DATE ? ? 56 ? ? 57 58 (62) 59 Cost of Goods Sold Cost of goods available for sale Less: Ending inventory Cost of goods sold 2 2 60 61 62 63 Proof of Cost of Goods Sold Date 64 Units ? Unit Cost 2 65 DATE Total Cost 2 ? 66 DATE ? 2 ? 67 DATE 2 ? ? 68 DATE ? ? 69 ? ? 70 71 72 AVERAGE COST ? 73 74 Cost of goods available for sale Units available for sale Average cost per unit 2 75 2 76 71 72 73 AVERAGE COST ? 2 Cost of goods available for sale Units available for sale Average cost per unit 74 75 2 76 77 (1) 78 Ending Inventory Units ? Unit Cost 2 Total Cost ? 79 80 81 (62) 82 Cost of Goods Sold Cost of goods available for sale Less: Ending inventory Cost of goods sold 83 ? 84 2 85 TEXT 86 ) (1) 87 (c) (2) As shown in (b). As shown in (b). produces the highest inventory amount, produces the hig highest cost of goods 2 2 TEXT sold, 88 89 90 91 92