80.2K

Verified Solution

Link Copied!

Waterway Industries markets CDs of numerous performing artists. At the beginning of March, Waterway had in beginning inventory 2,500 CDs with a unit cost of $6. During March, Waterway made the following purchases of CDs.

March 5		2,200		@		$7		March 21		5,200		@		$9
March 13		3,900		@		$8		March 26		2,200		@		$10

During March 12,200 units were sold. Waterway uses a periodic inventory system.

(a)

Determine the cost of goods available for sale.

The cost of goods available for sale

$enter the cost of goods available for sale in dollars

Calculate Average Cost. (Round answer to 3 decimal places, e.g. 5.125.)

Average Cost

$enter an average cost in dollars

Determine (1) the ending inventory and (2) the cost of goods sold under each of the assumed cost flow methods (FIFO, LIFO, and average-cost). (Round answers to 0 decimal places, e.g. 125.)

		FIFO		LIFO		AVERAGE-COST
The ending inventory		$enter a dollar amount		$enter a dollar amount		$enter a dollar amount
The cost of goods sold		$enter a dollar amount		$enter a dollar amount		$enter a dollar amount

Which cost flow method results in (1) the highest inventory amount for the balance sheet and (2) the highest cost of goods sold for the income statement?

(1)		select a method which Average-costFIFOLIFO produces the highest inventory amount.
(2)		select a method which Average-costFIFOLIFO produces the highest cost of goods sold.

Answer & Explanation Solved by verified expert

See Answer