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Problem 2 (25 points) Tommy Distribution markets CDs of the performing artist Unique. At the beginning of November. Tommy had in beginning inventory 2,000 of
Problem 2 (25 points) Tommy Distribution markets CDs of the performing artist Unique. At the beginning of November. Tommy had in beginning inventory 2,000 of Unique's CDs with a unit cost of $7. During November, Tommy made the following purchase of Unique's CDs. Nov.5. 2,500 @ $8 Nov. 10 3,500 @ 9 Nov. 17 3,000 @ 10 Nov. 26 4,000 @11 During November, total net sales 10,900 units, $174,400. Operating expense were $21,800, and the company's income tax rate is 30%. Tommy uses a periodic inventory system. Instructions a. Determine the cost of goods available for sale. (4 points) b. Determine (1) the ending inventory units and (2) the cost of goods sold under each of the assumed cost methods (FIFO, LIFO, and average - cost). Prove the accuracy of the cost of cost of goods sold under the FIFO and LIFO methods.( 8 points) C. Prepare comparative condensed income statement for November under FIFO, LIFO and average cost.(9 points) d. 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? (4 points)
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