Lobster Company had a beginning inventory on January 1 of 150 units of Product BU-54 at a cost of $20 per unit. During the year, the following purchases were made.
400 units at $23
350 units at $26
250 units at $24
100 units at $29
1,000 units were sold. Lobster Company uses a periodic inventory system.
(a) Determine the cost of goods available for sale.
(b) Determine (1) the ending inventory, and (2) the cost of goods sold under each of the assumed cost flow methods (FIFO, LIFO, and average-cost). Prove the accuracy of the cost of goods sold under the FIFO and LIFO methods.
(c) Which cost flow method results in (1) the highest inventory amount for the balance sheet, and (2) the highest cost of goods sold for the income statement?