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1. Emilys Tackle Shop uses a periodic inventory system and has the following transactions related to its top-selling Shimano fishing reel for the month of June 2010:

Date	Transactions	Units	Cost per Unit	Total Cost
Jun 1	Beg. inventory	16	$300	$4,800
Jun 7	Sale	11
Jun 12	Purchase	10	290	2,900
Jun 15	Sale	12
Jun 24	Purchase	10	280	2,800
Jun 27	Sale	8
Jun 29	Purchase	10	270	2,700
	15 units left June 30			13,200

Required:

1. Using the FIFO method, calculate ending inventory and cost of goods sold at June 30, 2010.
2. Using the LIFO method, calculate ending inventory and cost of goods sold at June 30, 2010.
3. Calculate the LIFO reserve.
4. Using the average cost method, calculate ending inventory and cost of goods sold at June 30, 2010.
5. Repeat 1 and 2 as if Emily used the perpetual method.

2.

1. LIFO Liquidation: When a LIFO company sells more inventory than it purchases, items from beginning inventory become COGS.

ABC Tractors is a tractor retailer which uses the LIFO cost flow assumption for inventory. ABC has beginning inventory worth $220, which consists of two tractors purchased for $70 two years ago and one tractor purchased for $80 last year.

Scenario 1: During July, ABC purchases three additional tractors for $120 each Scenario 2: During July, ABC purchases only two additional tractors for $120 each

On the last day of July, ABC sells three tractors for $140 each.

What is the difference between the gross margin under Scenario 1, where ABC does not liquidate LIFO layers, and Scenario 2, where ABC liquidates LIFO layers?

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