The Beautifully Fabulous Beauty Salon (BFBS) purchases its inventory from a manufacturer in California. BFBS has a high selling product called "Beauty Gloss". During the year BFBS disclosed the following information concerning the inventory:
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January 1, 2009
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Beginning Inventory
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245 units
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$27.00 per unit
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March 31, 2009
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Purchase of Inventory
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360 units
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$29.00 per unit
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June 30, 2009
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Purchase of Inventory
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1000 units
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$32.00 per unit
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September 30, 2009
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Sales of Inventory
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1447 units
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1. Analyze the above data using the LIFO an FIFO methods. What are the Inventory and Cost of Good Sold (COGS)?
a. In addition to the above data, suppose the number of units available at the beginning of January was 545 and the cost of the March purchase was $31.00 per unit; what would COGS be for September? What would the ending Inventory be for September?
2. Discuss the measurements used to recognize the amounts recorded in the Inventory and Cost of Goods Sold and the impact of Net Income.