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In: Accounting

Shanghai Company sells electronic equipment that it acquires from the US. During the year 2014, the...

Shanghai Company sells electronic equipment that it acquires from the US. During the year 2014, the inventory records reflected the following:

Units

Unit cost

Beg. Inventory

40

$60

Purchase 1

50

$70

Purchase 2

35

$75

At the end of 2014, 45 units are still on hand at the end of year 2014. Shanghai sell its electronic equipment at a fixed price of $100 each. Required:

  1. Determine the cost of goods sold and the cost of ending inventory assuming the company uses FIFO.

  1. Determine the amount of gross profit that would be reported for the year.

  1. Given the price trend shown above, which valuation method (FIFO, LIFO, or Weighted Average) will result in the lowest gross profit?

  1. Given the price trend shown above, which valuation method (FIFO, LIFO, or Weighted Average) will result in a better matching of Revenues & Cost of goods sold? Explain.

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Expert Solution

ekkarill92 answered 11 months ago
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