Accounting

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Question

Accounting

. Presented below is information relating to Havisham Co.’s purchases of merchandise during the month of April. The company uses a periodic inventory system. 600 units were sold at $260 unit price during the month.

Date Explanation Units Unit Cost

April. 1 B. Inventory 120 $ 200

April. 3 Purchases 160 222

April. 10 Purchases 140 250

April. 22 Purchases 375 245

Instructions:

a. Compute the ending inventory and cost of goods sold at April 30 using the FIFO and LIFO and average cost methods.

b. What is gross profit under each method?

c. Which method results in a larger amount reported for assets on the balance sheet? Which results in a larger amount reported for owner’s equity on the balance sheet?

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