To prepare solutions to the requirements listed below, use the data provided in P2 but assume that

Question:

To prepare solutions to the requirements listed below, use the data provided in P2 but assume that the company uses the perpetual inventory system.

In P2, The inventory, purchases, and sales of Product SOL for March and April are listed below. The company closes its books at the end of each month. It uses the periodic inventory system.

REQUIRED

1. Determine the cost of ending inventory and cost of goods sold for March and April using the average-cost method. Round unit costs to cents and totals to dollars.

2. Determine the cost of ending inventory and cost of goods sold for March and April using the FIFO method.

3. Determine the cost of ending inventory and cost of goods sold for March and April using the LIFO method.

4. Assume that this company grows for many years in a long period of rising prices. How realistic do you think the balance sheet value for inventory would be, and what effect would it have on the inventory turnover ratio?

Ending Inventory
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula Ending Inventory Formula =... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...