P6.3

Marlow Bed and Bath had a beginning inventory of 400 units of Product Kimbo at a cost of 8 per unit. During the year, purchases were :

Feb.20 200 units at 9

May.6 500 units at 10

Aug.12 600 units at 11

Dec.8. 300 units at 12

Marlow uses a periodic inventory system. Sales totaled 1,500 units.

Instructions

1. Determine the cost of goods available for sale.

2. Determine (1) the ending inventory and (2) the cost of goods sold under the two assumed cost flow method (FIFO and average-cost). Prove the accuracy of the cost of goods sold under the FIFO and average-cost methods

3. Which cost flow method results in (1) the lower ending inventory amount for the statement of financial position, and (2) the lower cost of goods sold for the income statement?