The F.L.A.C. Corporation sells a single product. The following is information on inventory, purchase, and sales for the current year:

(a) Compute the inventory balance and the cost of goods sold expense reported at the end of the year using the following methods: FIFO, LIFO, and average cost.
(b) Discuss the effect of each method on the balance sheet and income statement during periods ofinflation.

Transcribed Image Text:

Number of units Unit cost Sale price January 1 January 10 January 1-March 31 April 25 April 1-June 30 July 10 July 1-September 30 October 15 October 1-December nventory Purchase Sales Purchase Sales Purchase Sales Purchase 10,000 4,000 8,000 10,000 11,000 6,000 3,000 8,000 9,000 $3.00 3.50 4.00 4.50 5.00 5.00 5.50 6.00 6.50 Sales