What is the cost of goods sold (COGS)? How is it computed? What two financial reports does it impact and how?
Championship Sporting Goods started March with an inventory of 9 sets of golf clubs that cost a total of $1,350. During March, Charmpionship purchased 27 sets of clubs for $4,320. At the end of the month, Championship had 8 sets of golf clubs on hand. The store manager must select an inventory costing method, and he asks you to tell him both cost of goods sold and ending inventory under these three accounting methods:
a. Average cost (round average unit cost to the nearest cent)
b. FIFO
c. LIFO
Accounting records for Dundas Corporation yield the following data for the year ended June 30, 2012:
Inventory, June 30, 2011
$10,000
Purchases of inventory (on account)
46,000
Sales of inventory—83% on account; 17% for cash (cost $39,000)
75,000
Inventory at FIFO, June 30, 2012
17,000
▸ Requirements
1. Journalize Dundas’ inventory transactions for the year under the perpetual system.
2. Report ending inventory, sales, cost of goods sold, and gross profit on the appropriate financial statement.
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