Flying Tomato sells a snowboard, WhiteOut, that is popular with snowboard enthusiasts. Presented below is information relating to Flying Tomato’s purchases of WhiteOut snowboards during September. During the same month, 121 WhiteOut snowboards were sold at $170 each. Flying Tomato uses a periodic inventory system. Date Sept. 1 Sept. 12 Sept. 19 Sept. 26 Explanation Units Unit Cost Total Cost Inventory Purchases45106 Purchases Purchases 50112 25 $100 S 2,500 4,770 2,640 5.600 $15.510 24 110 Totals 144 Instructions: a) Compute the ending inventory at September 30 and cost of goods sold using the FIFO and LIFO methods. Prove the amount allocated to cost of goods sold under each method sold. What do you notice about the answers you found for each method? sheet? Which results in a larger amount reported for stockholders equity on the b) For both FIFO and LIFO, caiculate the sum of ending inventory and cost of goods c) What is gross profit under each method? d) Which method results in a larger amoupt reported for assets on the balance balance sheet?

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a) Ending inventory at September 30 = Total units available – Units sold = 144 – 121 = 23 units

Ending inventory:

FIFO = 23 X $112 = $2576

LIFO = 23 x $100 = $2300

Cost of good sold:

FIFO = $15510 – $2576 = $12934

LIFO = $15510 – $2300 = $13210

Cost of goods sold: FIFO
UnitsUnit Cost $Total Cost $
Sept. 1251002500
Sept. 12451064770
Sept. 19241102640
Sept. 26271123024
Total12112934
Cost of goods sold: LIFO
UnitsUnit Cost $Total Cost $
Sept. 12100200
Sept. 12451064770
Sept. 19241102640
Sept. 26501125600
Total12113210

b)

FIFOLIFO
Ending inventory25762300
Cost of goods sold1293413210
Total $1551015510

The sum of the ending inventory and cost of goods sold under both the methods is the same which is cost of the goods available for sale.

c)

FIFOLIFO
Sales (121 x $170)2057020570
Cost of goods sold1293413210
Gross profit $76367360

d) The FIFO method results in a larger amount reported for assets on the balance sheet and a larger amount reported for stockholders’ equity on the balance sheet