Edwards Company began operations in February 2019. Edwards accounting records provide the following data for...
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Accounting
Edwards Company began operations in February 2019. Edwards accounting records provide the following data for the remainder of 2019 for one of the items the company sells:
Activity
Units
Purchase Price (per unit)
Sale Price (per unit)
Beginning inventory
9
$58
Purchase 1, Feb. 15
6
72
Purchase 2, Mar. 22
8
80
Sale 1, Apr. 9
10
$150
Purchase 3, May 29
9
86
Sale 2, July 10
15
150
Purchase 4, Sept. 10
8
96
Sale 3, Oct. 15
12
150
Edwards uses a periodic inventory system. All purchases and sales were for cash.
Required:
1.
Compute cost of goods sold and the cost of ending inventory using FIFO.
2.
Compute cost of goods sold and the cost of ending inventory using LIFO.
3.
Compute cost of goods sold and the cost of ending inventory using the average cost method.
4.
Prepare the journal entries to record these transactions assuming Edwards chooses to use the FIFO method.
5.
Conceptual Connection: Which method would result in the lowest amount paid for taxes?
Answer & Explanation
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