# Calculate COGS Ending Inventory Gross Profit With FIFO LIFO And WAM

Question

Wave Riders Surfboard Company began business on January 1 of the current year. Purchases of surfboards were as follows:

 1/3: 100 boards   @ \$125 3/17: 50 boards @ \$130 5/9: 246 boards @ \$140 7/3: 400 boards @ \$150 10/23: 74 boards @ \$160

Wave Riders sold 710 boards at an average price of \$250 per board. The company uses a periodic inventory system.

Instructions

a. Calculate cost of goods sold, ending inventory, and gross profit under each of the following inventory valuation methods:

• First-in, first-out
• Last-in, first-out
• Weighted average

b. Which of the three methods would be chosen if management’s goal is to

(1) produce an up-to-date inventory valuation on the balance sheet?

(2) show the lowest net income for tax purposes?

Total Word Count 80

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