Savage Distribution markets CDs of the performing artist Little Sister. At the beginning of October, Savage had in

beginning inventory

1,200

Sister's CDs with a unit cost of

$5.00

During October Savage

made the following purchases of Sisters CDs.

Oct 3

4,000

@

$6.00

Oct 19

2,500

@

$8.00

Oct 9

3,000

@

$7.00

Oct 25

2,000

@

$9.00

During October

9,400

units were sold. Savage uses a periodic inventory system.

Instructions:

(a) Determine the cost of goods available for sale.

COST OF GOODS AVAILABLE FOR SALE

Date

Explanation

Units

Unit Cost

Total Cost

Oct 1

Text

Quantity

Amount

Formula

Date

Text

Quantity

Amount

Formula

Date

Text

Quantity

Amount

Formula

Date

Text

Quantity

Amount

Formula

Date

Text

Quantity

Amount

Formula

Total

Formula

Formula

(b) Determine (1) the ending inventory and (2) the cost of goods sold under each of the assumed cost flow methods (FIFO, LIFO, and average cost). Prove the accuracy of the cost of goods sold under the FIFO and LIFO methods. (Note: For average cost, round cost per unit to three decimal places.)

(b)(1) FIFO

(b)(2) FIFO

Ending Inventory

Cost of Goods Sold

Date

Units

Unit Cost

Total Cost

Title

Amount

Title

Amount

Date

Quantity

Amount

Formula

Title

Formula

Date

Quantity

Amount

Formula

Formula

Formula

Proof of Cost of Goods Sold

Date

Units

Unit Cost

Total Cost

Date

Quantity

Amount

Formula

Date

Quantity

Amount

Formula

Date

Quantity

Amount

Formula

Date

Quantity

Amount

Formula

Formula

Formula

(b)(1) LIFO

(b)(2) LIFO

Ending Inventory

Cost of Goods Sold

Date

Units

Unit Cost

Total Cost

Cost of goods available for sale

Amount

Title

Amount

Oct 1

Quantity

Amount

Formula

Title

Formula

Date

Quantity

Amount

Formula

Formula

Formula

Proof of Cost of Goods Sold

Date

Units

Unit Cost

Total Cost

Date

Quantity

Amount

Formula

Date

Quantity

Amount

Formula

Date

Quantity

Amount

Formula

Date

Quantity

Amount

Formula

Formula

Formula

(b)(1) Average Cost

(b)(2) Average Cost

Ending Inventory

Cost of Goods Sold

Title

Amount

Title

Amount

Title

Quantity

Title

Amount

Title

Formula

Title

Formula

Minor differences may occur between Excel and solutions manual due to significant digits.

Title

Quantity

Title

Amount

Title

Formula

(c) 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?

(c) (1)

Enter text answer here.

(c) (2)

Enter text answer here.