Problem
Assume an outlet of The Runner's Store began August 2020 with 40 pairs of running shoes that cost the store $40 each. The sale price of these shoes was $70. During August, the store completed these inventory transactions:
Units Unit Cost Unit Sale Price
Aug. 3 Sale .............................. 16 $70
8 Purchase ...................... 80 41
70 11 Sale .............................. 24
72 19 Sale .............................. 9
72 24 Sale .............................. 30
30 Purchase ...................... 18 42
2 Learning Objectives 1
Measure cost of goods sold and ending inventory-perpetual system-and determine which method to use CT.
Task
Determine the store's cost of goods sold, gross profit, and ending inventory using (i) FIFO and (ii) weighted-average assuming the perpetual system is used.
How would your answer change under (i) FIFO and (ii) weighted-average cost if the periodic system was used?
Using the facts provided, identify the information that is relevant in determining which inventory system to use to keep track of the store's inventory. Specify how each information item is relevant to your decision.