Question

Greg’s Bicycle Shop has the following transactions related to its top-selling Mongoose mountain bike for the month of March. Greg's Bicycle Shop uses a periodic inventory system.

Date	Transactions	Units	Cost per Unit	Total Cost
March 1	Beginning inventory	20	$225	$	4,500
March 5	Sale ($350 each)	15
March 9	Purchase	10	245		2,450
March 17	Sale ($400 each)	8
March 22	Purchase	10	255		2,550
March 27	Sale ($425 each)	12
March 30	Purchase	7	275		1,925
				$	11,425

Calculate ending inventory and cost of goods sold at March 31, using 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.

Comparing FIFO and LIFO, which one provides the more meaningful measure of ending inventory?

Answer 1

STATEMENT SHOWING INVENTORY RECORD UNDER PERPETUAL Spec. Ident. METHOD
	RECIEPTS	COST OF GOODS SOLD	BALANCE
DATE	UNITS	RATE	AMOUNT $	UNITS	RATE	AMOUNT $	UNITS	RATE	AMOUNT $
01-Mar							20	225	4500
05-Mar				15	225	3375	5	225	1125
09-Mar	10	245	2450				5	225	1125
							10	245	2450
17-Mar				8	245	1960	5	225	1125
							2	245	490
22-Mar	10	255	2550				5	225	1125
							2	245	490
							10	255	2550
27-Mar				4	225	900	1	225	225
				8	255	2040	2	245	490
							2	255	510
30-Mar	7	275	1925				1	225	225
							2	245	490
							2	255	510
							7	275	1925
TOTAL	27		6925	35		8275	12		3150
			Spec. Ident.
Ending inventory		3150
Cost of goods sold		8275
Req 2.
FIFO provides more meaningful measure of ending inventory