Date March 1 March 5 March 9 March 17 March 22 March 27 March 30 Transactions Beginning inventory Sale ($300 each) Purchase Sale ($350 each) Purchase Sale ($375 each) Purchase Units 20 15 10 8 10 12 8 Unit Cost $200 220 230 250 Total Cost $4,000 2,200 2,300 2,000 $10,500 For the specific identification method, the March 5 sale consists of bikes from beginning inventory, the March 17 sale consists of bikes from the March 9 purchase, and the March 27 sale consists of four bikes from beginning inventory and eight bikes from the March 22 purchase. Required: 1. Calculate ending inventory and cost of goods sold at March 31, using the specific identification method. 2. Using FIFO, calculate ending inventory and cost of goods sold at March 31. 3. Using LIFO, calculate ending inventory and cost of goods sold at March 31. 4. Using weighted-average cost, calculate ending inventory and cost of goods sold at March 31. 5. Calculate sales revenue and gross profit under each of the four methods. 6. Comparing FIFO and LIFO, which one provides the more meaningful measure of ending inventory? 7. If Mitchell Bicycle Shop chooses to report inventory using LIFO instead of FIFO, record the LIFO adjustment.

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in…