The Following Are Data Available for Blue Grass for the Month

question 38

Essay

The following are data available for Blue Grass for the month of June: $$\begin{array} { | l | r | l | } \hline \text { Sales } & 1,200 & \text { units } \\\hline \text { Beginning inventory } & 300 & \text { units } @ \$ 4.00 \\\hline \text { Purchases, in chronological order } & 600 & \text { units } @ \$ 4.20 \\\hline & 400 & \text { units @ \$4.40 } \\\hline & 500 & \text { units } @\$ 4.50 \\\hline\end{array}$$ (a.) Calculate cost of goods sold and ending inventory under the following cost flow assumptions:
(1.) Weighted-average
(2.) FIFO
(3.) LIFO
(b.) Assume net income using the weighted average cost flow assumption was $6,400. Calculate net income under FIFO and LIFO.

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Definitions:

Operating Activities

Business actions directly related to producing and delivering goods and services, which are reflected in the company's cash flow.

Investing Activities

Financial actions that involve the purchase and sale of long-term assets and other investments not considered to be cash equivalents.

Financing Activities

Transactions that involve raising capital or repaying funds, including issuing shares, borrowing, or repaying debt.

Financial Statement Users

Individuals or groups, such as investors, creditors, and regulatory agencies, who analyze financial statements to make informed decisions.