Effect of cost flow on ending inventory: intermittent sales and purchases
Sand Hill, Inc., had the following series of transactions for 2012:
Transaction | Description | |
Jan. 1 | Beginning inventory | 50 units @ $30 |
Mar. 15 | Purchased | 200 units @ $35 |
May 30 | Sold | 170 units @ $70 |
Aug. 10 | Purchased | 275 units @ $40 |
Nov. 20 | Sold | 340 units @ $75 |
Required
a. Determine the quantity and dollar amount of inventory at the end of the year, assuming Sand Hill uses the FIFO cost flow assumption and keeps perpetual records.
b. Write a memo explaining why Sand Hill. Inc.. would have difficulty applying the weighted average method on a perpetual basis.
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