In: Accounting
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.