REI carries the Desert Rat hiking boot whose sales are directed at Sonoran desert areas such as Arizona. The Scottsdale REI store uses a perpetual inventory system for tracking its inventory of boots. Its beginning inventory, purchases and sales for May are as follows.

Units Sold Unit

Date Activity Units Acquired at Cost at Retail Inventory

5/ 1 Beg Inv 10 Units @ $ 91 = $ 910 10 Units

5/ 3 Purchase 15 Units @ $106 = $1,590 25 Units

5/14 Sales 20 Units @$130 5 Units

5/17 Purchase 20 Units @ $115 = $2,300 25 Units

5/28 Purchase 10 Units @ $119 = $1,190 35 Units

5/31 Sales ________ 23 Units @$150 12 Units

Goods Available

For Sale 55 Units

Units Sold 43 Units

Units in Ending Inventory 12 Units

Notice: Goods Available for Sale = Beginning Inventory + Purchases

1. Apply the FIFO method of inventory costing to calculate the dollar value of ending inventory and cost of goods sold. Clearly identify the ending inventory and cost of goods sold amounts.
2. Apply the LIFO method of inventory costing to calculate the dollar value of ending inventory and cost of goods sold. Clearly identify the ending inventory and cost of goods sold amounts
3. Complete the following Income Statement for REI. Assume that operating expenses are $500, and that the income tax rate is 30%.

4. FIFO LIFO

   Sales __________ __________

   COGS __________ __________

   Gross Profit __________ __________

   Operating Expense __________ __________

   Income Before Taxes __________ __________

   Income Taxes __________ __________

   Net Income __________ __________