Dyna

Problem P6-2A, Determine cost of goods sold and ending inventory using FIFO, LIFO, and average-cost with analysis. Dyna Distribution markets CDs of the performing artist King James. At the beginning of March, Dyna had in beginning inventory  1,500  King James CDs with a unit cost of $7.00  During March Dyna made the following purchases of King James CDs.

Mar 5 3,500  units at $8.00

Mar 13 4,000  units at $9.00

Mar 21 2,000  units at $10.00

Mar 26 2,000  units at $11.00

During March 10,000  units were sold. Dyna uses a periodic inventory system.

Instructions:

(a) Determine the cost of goods available for sale.

(b)(1) Determine the ending inventory and cost of goods sold under the First-in, First-out cost flow method. Prove the accuracy of the cost of goods sold.

(b)(1) Determine the ending inventory and cost of goods sold under the First-in, First-out cost flow method. Prove the accuracy of the cost of goods sold.

(b)(2) Determine the ending inventory and cost of goods sold under the Last-in, First-out cost flow method. Prove the accuracy of the cost of goods sold.

(b)(3) Determine the ending inventory and cost of goods sold under the Average Cost cost flow method.

(c)(1) Which cost flow method results in the highest inventory amount for the balance sheet?

(c)(2) Which cost flow method results in the highest cost of goods sold for the income statement?