(L.OBJ. 4) Comparing cost of goods sold in a perpetual system—FIFO, LIFO, and average-cost amounts [15—20 min]
Assume that an RB Tire Store completed the following perpetual inventory transactions for a line of tires:
Requirements
1. Compute cost of goods sold and gross profit tinder FIFO.
2. Compute cost of goods sold and gross profit using LWO.
3. Compute cost of goods sold and gross profit using average cost. (Round average cost per unit to the nearest cent and all other amounts to the nearest dollar.)
4. Which method results in the largest gross profit and why?
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