Question

Titans, Inc uses a periodic inventory system. One of the store's most popular products is a nerf-type basketball. The inventory quantities, purchases, and sales of this product for the most recent year are as follows:

	Number of Units	Cost per Unit	Total Cost
Inventory, January	300	$5.20	$1,560
Purchase, March 12	100	$5.60	$560
Purchase, June 19	350	$6.50	$2,275
Purchase, September 3	250	$8.10	$2,025
Units Sold	800

A. What is the cost of the December 31 inventory and the cost of goods sold for the basketballs during the year under each of the following cost flow assumptions? Show your work.

1. First in, first-out

2. Last in, first-out

3. Weighted Average cost (round to the nearest dollar, except unit cost)

B. Which of the three inventory pricing methods provides the most useful balance sheet valuation of inventory considering the current replacement cost of the basketballs? Explain.

C. Which of the three inventory pricing methods provides the most useful measure of income in light of the costs incurred by Titans to replace the basketballs when they are sold? Consider which method results in a net income measure that is most predictive of future profitability. In other words, if you were thinking about buying stock in Titans, which inventory pricing measure gives you the most useful measure of its future profitability? Explain.

Answer 1

** Please feel free to ask me if any more explanations are required.

Thank You..!!