Alta Ski Company\'s inventory records contained the following information regard

Question

Alta Ski Company's inventory records contained the following information regarding its latest ski model. The company uses a periodic inventory system.

Required:
1a. Which method, FIFO or LIFO, will result in the highest cost of goods sold figure for January 2018?
1b. Which method will result in the highest ending inventory balance?
2. Compute cost of goods sold for January and the ending inventory using both the FIFO and LIFO methods.

Beginning inventory, January 1, 2018 900 units @ $100 each Purchases: January 15 1,900 units @ $115 each January 21 1,700 units @ $120 each Sales: January 5 850 units @ $140 each January 22 1,250 units @ $150 each January 29 700 units @ $155 each Ending inventory, January 31, 2018 1,700 units

Explanation / Answer

1a. In case of rising cost, the method that will result in the highest cost of goods sold figure for January 2018 is LIFO.

1b. In case of rising cost, the method that will result in the highest ending inventory balance is FIFO.

Part 2

FIFO

Cost of goods sold = (900*100)+(1900*115)=308500

Ending inventory = (1700*120)=204000

LIFO

Cost of goods sold = (1700*120)+(1100*115)=330500

Ending inventory = (900*100)+(800*115) = 182000

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