ASHFORD ACC 205 Week 3 Inventory PLEASE DOWNLOAD HEREInventory. Please complete each of the exercises below in a word document.Save the document, and submit it in the appropriate week using the AssignmentSubmission button.1. Inventory valuation methods: Basic computationsThe January beginning inventory of the White Company consisted of 300 unitscosting $40 each. During the first quarter, the company purchased two batches ofgoods: 700 units at $44 on February 21 and 800 units at $50 on March 28. Salesduring the first quarter were 1,400 units at $75 per unit. The White Company usesa periodic inventory system.Using the White Company data, fill in the chart that follows to compare theresults obtained under the FIFO, LIFO, and weighted-average inventory methods.FIFOLIFOWeighted AverageGoods available for sale$$$Ending inventory, March 31Cost of goods sold2. Analysis of LIFO versus FIFOIndicate whether LIFO or FIFO best describes each of the following:a. Gives highest profits when prices fall.b. Yields lowest income taxes when prices rise.
c. Generates an ending inventory valuation that somewhat approximatesreplacement cost.d. Matches recent costs against current selling prices on the income statement.e. Comes closest to approximating the physical flow of goods of a fruit andvegetable dealer.f. Results in lowest cost of goods sold in inflationary periods.3. Inventory errorsThe income statements of Diamond Company for the years ended December 31,19X1, and 19X2 follow. 19X119X2Net salesCost of goods soldBeginning inventoryAdd: Net purchases$ 95,000 380,000$440,000$109,000 404,000$483,000Goods available forsaleLess: Ending inventory$475,000 109,000$513,000 127,000Cost of goods sold366,000386,000
Gross profitOperating expenses$ 74,000 58,000$ 97,000 67,000Net income$ 16,000$ 30,000c. Goods costing $3,000 were accidentally excluded from the 19X1 endingphysical inventory count. These goods were sold during 19X2, and all aspects ofthe sale were properly recorded.InstructionsPrepare corrected income statements for 19X1 and 19X2.Determine the impact of the preceding errors on the December 31, 19X2, ownersequity balance.4. Inventory valuation methods: Computations and conceptsWave Riders Surf Board Company began business on January 1 of the currentyear. Purchases of surf boards were as follows: Jan.3100 boards <& $125Mar.1750 boards @ $130May9246 boards @ $140July3
400 boards @ $150Oct.2374 boards @ $160Wave Riders sold 710 boards at an average price of $250 per board. Thecompany uses a periodic inventory system.InstructionsCalculate cost of goods sold, ending inventory, and gross profit under each of thefollowing inventory valuation methods: First-in, first-out