Principles of Accounting

Sigchi4life
Category:
Accounting
Price: $10 USD

Question description

Flying Tomato sells a snowboard, WhiteOut, that is popular with snowboard enthusiasts. Presented

below is information relating to Flying Tomato’s purchases of WhiteOut snowboards during September.

During the same month, 121 WhiteOut snowboards were sold at $170 each. Flying Tomato uses a

periodic inventory system.

Date Explanation Units Unit Cost Total Cost

Sept. 1 Inventory 25 $ 100 $ 2,500

Sept. 12 Purchases 45 106 4,770

Sept. 19 Purchases 24 110 2,640

Sept. 26 Purchases 50 112 5,600

Totals 144 $ 15,510

Instructions:

(a) Compute the ending inventory at September 30 and cost of goods sold using the FIFO and LIFO

methods. Prove the amount allocated to cost of goods sold under each method.

(b) For both FIFO and LIFO, calculate the sum of ending inventory and cost of goods sold. What do you

notice about the answers you found for each method?

(c) What is gross profit under each method?

(d) Which method results in a larger amount reported for assets on the balance sheet? Which results in

a larger amount reported for owner’s equity on the balance sheet?


Tutor Answer

(Top Tutor) Daniel C.
(997)
School: University of Virginia
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