The following schedule summarizes the inventory purchases, Ask an Expert

Accounting

The following schedule summarizes the inventory purchases and sales of Brooks Street Enterprises during January 2009;

# of Units Per Unit Cost Per Unit Selling Price
BI 400 $40
Jan.2 purchase 200 44
Jan.5 sale 300 $80
Jan.9 purchase 200 48
Jan.14 sale 350 90
Jan.18 purchase 200 50
Jan.21 sale 150 90
Jan.25 purchase 500 52
Jan.31 sale 450 100

(a) Determine Brooks Street's ending inventory, cost of goods sold, and gross profit for January 2009, assuming the company uses a perpetual inventory system and the following inventory costing methods: (1) FIFO, (2) LIFO, and (3) moving-average.

(b) Which of the three inventory costing methods yields the most impressive financial results for Brooks Street? Explain.

(c) What factors should a company consider when choosing an inventory costing method? Should one of these factors be the inventory costing method preferred by the decision makers who will be using the company's financial statements?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9978023

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