Cost of Sales As an accountant for the Lee Company, your supervisor gave you the following calculations of the gross profit for the first quarter:
|
Alternative |
Sales ($50 per unit) |
Cost of Goods Sold |
Gross Profit |
|
A |
$500,000 |
$200,000 |
$300,000 |
|
B |
500,000 |
228,000 |
272,000 |
|
C |
500,000 |
213,333 |
286,667 |
The three alternative cost flow assumptions are FIFO, Average, and LIFO (the alternatives are not necessarily presented in this sequence). The company uses the periodic inventory system. The computation of the cost of goods sold under each alternative is based on the following data:
|
Units |
Cost/Unit |
|
|
Inventory, January 1 |
12,000 |
$20 |
|
Purchase, January 10 |
4,000 |
21 |
|
Purchase, February 15 |
6,000 |
22 |
|
Purchase, March 10 |
8,000 |
23 |
Required
Prepare schedules computing the ending inventory (in units and dollars) and proving the cost of goods sold shown here under each of the three alternatives.