Wave Riders Surfboard Company began business on January 1 of the current year. Purchases of surfboards were as follows:

Wave Riders Surfboard Company began business on January 1 of the current year. Purchases of surfboards were as follows:

Inventory valuation
methods: computations and concepts
. Wave Riders
Surfboard Company began business on January 1 of the current year. Purchases of
surfboards were as follows:

1/3:

100
boards @$125

3/17:

50
boards @ $130

5/9:

246
boards @140

7/3:

400
boards @ $150

10/23:

74
boards @$160

Wave Riders sold 710 boards at an
average price of $250 per board. The company uses a periodic inventory system.

Instructions

a. Calculate cost of
goods sold, ending inventory, and gross profit under each of the following
inventory valuation methods:

·
First-in, first-out

·
Last-in, first-out

·
Weighted average

b.
Which of the three methods would be chosen if management’s goal is to

(1) produce an
up-to-date inventory valuation on the balance sheet?

(2)
approximate the physical flow of a sand and gravel dealer?

(3) report low earnings (for tax purposes) for a separate electronics
company that has been experiencing
declining purchase prices?


Price: £ 45

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