Calculate the gross profit earned by shady dog music

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Reference no: EM132642627

Shady Dog Music sells new music CDs of popular artists. The inventory and purchases for August in chronological order During August Shady Dog Music sold 1525 CDs at a price of $14.99 each. Assume that Shady Dog Music uses a periodic inventory system.

Required:

Question 1: Compute the ending inventory at August 31 and the cost of goods sold for August using the following cost flow assumptions:

1. FIFO
2. LIFO
3. Average Cost

Show the number of units and the unit costs of each inventory layer comprising the ending inventory.

Question 2: Calculate the gross profit earned by Shady Dog Music during the month of August using each of the cost figures (FIFO, LIFO, and Average Cost) computed in part c.

Question 3: hady Dog Music is applying for a small business loan in early September from Gondor Home Savings Bank. The bank has asked Shady Dog Music to include an income statement for their most recent month of business (August). In your opinion, which inventory valuation method (FIFO, LIFO, and Average Cost) should Shady Dog Music choose for August? Why?

Reference no: EM132642627

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