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 Beginning inventory, January 1, 2018 Purchases 1, 350 units @ $100 each January 15 January 21 2,800 units $115 each 2,600 units $120 each Sales: January 5 January 22 January 29 1,300 units $140 each 1,700 units $150 each 1,150 units G $155 each 2, 600 units Ending inventory, January 31, 2018 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

Explanation / Answer

1a) LIFO since it is based on latest purchases 1b) FIFO since ending inventory will comprise of last purchases 2) FIFO cost of goods avaialble for sale cost of goods sold - periodic Ending inventory units per unit total units per unit total units per unit total Beginning inventory 1,350 100 135000 1350 100 135,000 purchaes: 15-Jan 2,800 115 322000 2,800 115 322,000 21-Jan 2,600 120 312000 2,600 120 312,000 total 6,750 769000 4150 457,000 2,600 312,000 LIFO cost of goods avaialble for sale cost of goods sold - periodic Ending inventory units per unit total units per unit total units per unit total Beginning inventory 1,350 100 135000 1350 100 135,000 purchaes: 15-Jan 2,800 115 322000 1,550 115 178,250 1,250 115 143750 21-Jan 2,600 120 312000 2,600 120 312000 total 6,750 769000 4150 490,250 2,600 278,750

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