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:
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 12500 |
| 3/17: | 50 boards @ $130 6500 |
| 5/9: | 5/9: 246 boards @ $140 34440 |
| 7/3: | 400 boards @ $150 60000 |
| 10/23: Total purchased Sold Avg price Ending inventory | 74 boards @ $160 11840 870 $ 705 125280 750 250 120 |
Wave Riders sold 750 boards at an average price of $250 per board. The company uses a periodic inventory system.
ending inventory 120
Instructions
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
Which of the three methods would be chosen if management’s goal is to
produce an up-to-date inventory valuation on the balance sheet?
approximate the physical flow of a sand and gravel dealer?
report low earnings (for tax purposes) for a separate electronics company that has been experiencing declining purchase prices?
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