ACC 205 Week 3 Assignment E6-23 JR Tire Store

E6-23 Comparing cost of goods sold in a perpetual systemFIFO, LIFO, and average-cost methods [1520 min]

Assume that a JR Tire Store completed the following perpetual inventory transactions for a line of tires:

Beginning inventory 16 tires @ $ 65

Purchase 10 tires @ $ 78

Sale 12 tires @ $ 90

Requirements

1. Compute cost of goods sold and gross profit using FIFO.

2. Compute cost of goods sold and gross profit using LIFO.

3. Compute cost of goods sold and gross profit using average cost. (Round average cost per unit to the nearest cent and all other amounts to the nearest dollar.)

4. Which method results in the largest gross profit and why?