Power Up Ltd. is a distributor of car batteries to local mechanics. The company uses a perpetual inventory system. They calculate inventory values by applying average cost and reports under ASPE.

Power Up Ltd. had 100 units at $80 each in its inventory on January 31, 2021. Details of purchases and sales for the month of February 2021 are shown below:

Date		Units	Unit Cost	Selling Price
Feb 7	Purchase	220	$84
Feb 11	Sale	240		$150
Feb 18	Purchase	300	$86
Feb 24	Sale	275		$150

Note: All sales and purchases are made on the account. Round all calculations to two decimals.

1. Calculate the ending inventory (in units and dollars) and the total cost of goods sold for the month of February 2021. Show all calculations.
2. When the physical count was completed on February 28, 2021, there were only 104 batteries on hand in the warehouse. Record the entry, if any, the company should prepare to record the discrepancy.
3. If the company used First In First Out (FIFO) instead of average cost, would the total February 2021 Cost of Goods Sold be higher or lower? Explain. (No calculations are necessary).
4. Which method (Average cost or FIFO) would result in a higher gross profit for the month of February 2021? (Calculations are not required.)
5. What is one guideline that Power Up Ltd. should consider when deciding between Average cost and FIFO for its inventory formula?