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P6-2A Breathless Distribution markets CDs of the performing artist Christina Spears. At the beginning of October, Breathless had in beginning...
P6-2A Breathless Distribution markets CDs of the performing artist Christina Spears. At thebeginning of October, Breathless had in beginning inventory 1,000 Spears CDs with a unit costof $5. During October Breathless made the following purchases of Spears CDs.Oct. 3 3,500 @ $6 Oct. 19 2,000 @ $8Oct. 9 4,000 @ $7 Oct. 25 2,000 @ $9During October 10,000 units were sold. Breathless uses a periodic inventory system.Instructions(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 assumedcost flow methods (FIFO, LIFO, and average cost). Prove the accuracy of the costof goods sold under the FIFO and LIFO methods.(c) Which cost flow method results in (1) the highest inventory amount for the balance sheetand (2) the highest cost of goods sold for the income statement?(b)(2) Cost of goods sold:FIFO $66,000LIFO $74,000Average $70,400
