Yared Company uses a periodic inventory system. The company€™s accounting records for the most popular item in inventory showed the following details:

Required:
Compute
(a) The cost of goods available for sale during 2015
(b) The cost of ending inventory at December 31, 2015
(c) The cost of sales for 2015, under each of the following inventory costing methods (show computations and round to the nearest dollar):
1. Weighted- average cost.
2. FIFO.
3. Specific identification, assuming that the company is permitted to use it and that two- fifths of the units sold on March 14, 2015, were selected from the beginning inventory and three-fifths from the purchase of January 30, 2015. Assume that the sale of August 31, 2015, was selected from the remainder of the beginning inventory, with the balance from the purchase of May 1, 2015.
As a shareholder, which of these three methods would you prefer?

Transcribed Image Text:

Transaction Beginning Inventory, January 1, 2015 Transactions during 2015: a. Purchase, January 30 b. Sale, Mach 14 ($5 each) c. Purchase, May 1 d Sale, August 31 ($5 each) Units Unit Cost 1,800 $2.50 3.10 4.00 2,500 (1,450) 1,200 (1,900)