P6-2A Turner Distribution markets CDs of numerous performing artists. At the beginning of March, Turner had in beginning inventory 2,500 CDs with a unit cost of $7. During March, Turner made the following purchases of CDs.
Determine cost of goods sold and ending inventory using FIFO, LIFO, and average-cost with analysis.
(SO 2,3), AP
March 5 2,000 @ $8
March 13 3,500 @ $9
March 21 5,000 @ $10
March 26 2,000 @ $11
During March 12,000 units were sold. Turner uses a periodic inventory system.
(a) Determine the cost of goods available for sale.
(b) 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). Prove the accuracy of the cost of goods sold under the FIFO and LIFO methods. (Note: For average-cost, round cost per unit to three decimal places.)
(c) 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?