# Inventories

Glee Distribution markets CDs of the performing artist Unique. At the beginning of October, Glee had in beginning inventory 2,000 of Unique's CDs with a unit cost of \$7. During October, Glee made the following purchases of Unique's CDs.
 Oct. 3 2,500 @ \$8 Oct. 19 3,000 @ \$10 Oct. 9 3,500 @ \$9 Oct. 25 4,000 @ \$11

During October, 10,900 units were sold, Glee uses a periodic inventory system.

### Instructions

1. Determine the cost of goods available for sale
2. Determine (1) the ending inventory, and (2) the cost of goods sold under each of the assumed cost flow methods (FIFO, LIFO, and average-cost). Prove the accuracy of the cost of goods under the FIFO and LIFO methods.
3. Which cost flow method results in (1) the highest inventory amount for the balance sheet, and (2) the highest cost o goods sold for the income statement?

### Solution

a.
Glee Distribution

b.

1.
FIFO Method

2.
LIFO Method

3.
Average Cost Method

c.
1. FIFO shows the highest inventory amount for the balance sheet
2. LIFO shows the highest cost of goods sold for the income statement.