For each of the following cost flow assumptions, calculate (i) cost of goods sold, (ii) ending… 1 answer below »

Minsoo Ltd. is a retailer operating in Edmonton, Alberta. Minsoo uses the perpetual inventory method. All sales returns from customers result in the goods being returned to inventory; the inventory is not damaged. Assume that there are no credit transactions; all amounts are settled in cash. You are provided with the following information for Minsoo Ltd. for the month of January 2014.

Date

Description

Quantity

Unit Cost or Selling Price

December 31

Ending inventory

160

$17

January 2

Purchase

100

21

January 6

Sale

150

40

January 9

Sale return

10

40

January 9

Purchase

80

24

January 10

Purchase return

10

24

January 10

Sale

60

45

January 23

Purchase

100

28

January 30

Sale

110

50

Instructions

(a) For each of the following cost flow assumptions, calculate (i) cost of goods sold, (ii) ending inventory, and (iii) gross profit.

(1) LIFO.

(2) FIFO.

(3) Moving-average cost.

(b) Compare results for the three cost flow assumptions.

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