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Example Exercise 1

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Example Exercise 1

Inventory Cost Flow Assumptions

Example Exercise 1

Inventory Cost Flow Assumptions - FIFO

Example Exercise 1

Inventory Cost Flow Assumptions - LIFO

Example Exercise 1

Inventory Cost Flow Assumptions–Average Cost

2

Example Exercise 1

1

Sales$70

Less cost of merchandise sold(45)

Gross Profit$25

Ending Inventory ($48 + $51)$99

(a) FIFO

2

Example Exercise 1

1

Sales$70

Less: cost of merchandise sold(51)

Gross Profit$19

Ending Inventory ($45 + $48)$93

(b) LIFO

2

Example Exercise 1

1

Sales$70

Less: cost of merchandise sold(48)

Gross Profit$22

Ending Inventory ($48 x 2)$96

(c) Average Cost

Example Exercise 1

1

1

For Practice: PE 1A, PE 1B