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Shanghai Company sells electronic equipment that it acquires from the US. During the year 2014, the...

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Accounting

Shanghai Company sells electronic equipment that it acquiresfrom the US. During the year 2014, the inventory records reflectedthe following:

Units

Unit cost

Beg. Inventory

40

$60

Purchase 1

50

$70

Purchase 2

35

$75

At the end of 2014, 45 units are still on hand at the end ofyear 2014. Shanghai sell its electronic equipment at a fixed priceof $100 each. Required:

  1. Determine the cost of goods sold and the cost of endinginventory assuming the company uses FIFO.

  1. Determine the amount of gross profit that would be reported forthe year.

  1. Given the price trend shown above, which valuation method(FIFO, LIFO, or Weighted Average) will result in the lowest grossprofit?

  1. Given the price trend shown above, which valuation method(FIFO, LIFO, or Weighted Average) will result in a better matchingof Revenues & Cost of goods sold? Explain.

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