Answered: Concord Distribution markets CDs of the…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Concord Distribution markets CDs of the performing artist Fishe. At the beginning of October, Concord had in beginning inventory 2,500 of Fishe’s CDs with a unit cost of $7. During October, Concord made the following purchases of Fishe’s CDs.

Oct. 3		3,125	@	$8		Oct. 19		3,750	@	$10
Oct. 9		4,375	@	$9		Oct. 25		5,000	@	$11

During October, 13,625 units were sold. Concord uses a periodic inventory system.

Determine the cost of goods available for sale.

Cost of goods available for sale

Calculate weighted average cost per unit. (Round answer to 2 decimal places, e.g. 2.25.)

Weighted average cost per unit

Determine (1) the ending inventory and (2) the cost of goods sold under each of the assumed cost flow methods (FIFO, LIFO, and average-cost). Prove the accuracy of the cost of goods sold under the FIFO and LIFO methods. (Round answers to 0 decimal places, e.g. 1,250. Use weighted-average unit cost rounded to 2 decimal places for computations.)

	FIFO	LIFO	AVERAGE-COST
The ending inventory	$	$	$
The cost of goods sold	$	$	$

Which cost flow method results in (1) the highest inventory amount for the balance sheet and (2) the highest cost of goods sold for the income statement?

(1)		(FIFO, LIFO, or Average-cost) results in the highest inventory amount, $ ?
(2)		(FIFO, LIFO, or Average-cost) results in the highest cost of goods sold, $ ?

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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