Question

In: Accounting

Inventory Balance and COGS Canfield Trading shows the beginning inventory of a particular product, and the...

  1. Inventory Balance and COGS

Canfield Trading shows the beginning inventory of a particular product, and the purchases during the current year, as follows:

Jan.

1

Beginning Inventory

35

units @

$6.50

=

$227.50

Apr.

8

Purchase

40

units @

$6.40

=

$256.00

Aug.

11

Purchase

30

units @

$5.90

=

$177.00

Dec.

23

Purchase

35

units @

$5.50

=

$192.50

Total available for Sale

140

units

$853.00

During the year Canfield Trading sold in total 95 units of this product.

Instruction: (show your calculations and round to 2 decimal places)

Determine the cost of the year-End Inventory and the Cost of Goods Sold for this product under each of the following Methods of Inventory Valuation:

Inventory at Dec. 31st

Cost of Goods Sold

Average Cost

First-in, First-out

Last-in, First-out

If Canfield Trading wants to achieve a high profit end of the year, which method should they choose? Explain fully your answer.

Solutions

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