Question

The records for the Sedona Company showed the following for the one item they sell during the year ended December 31, 2022: Required. Assuming a periodic inventory system compute the cost of goods sold duing the year and the ending inventory in dollass under each of the following inventory costing methods (show computations and round to the nearest cents): 1) Weighted-average cost (Average cost method the book calls it) 2) First-in, First-out (FIFO) 3) Iast-in, First-out (LIFO)

Answer 1

Computing the cost of goods sold and ending inventory for the Sedona Company involves using three inventory costing methods: Weighted-average, FIFO, and LIFO. Each method produces unique financial outcomes, affecting the company's reported financial status and tax burden.

Step-by-step explanation:

The records for the Sedona Company, concerning the cost calculations for their item, require computations of cost of goods sold (COGS) and ending inventory under various inventory costing methods. This is a typical task in accounting that involves the application of different inventory valuation methods: Weighted-average cost, First-in, First-out (FIFO), and Last-in, First-out (LIFO). For the Weighted-average cost method, the formula is:(Total cost of goods available for sale) / (Total units available for sale) = Weighted-average cost per unit

Then, multiply the weighted-average cost per unit by the units sold to get COGS, and by the units remaining to get ending inventory.With FIFO, the oldest inventory costs are assigned to COGS, and the newest costs to ending inventory.LIFO assigns the most recent costs to COGS and the oldest costs to ending inventory. Each method provides a different COGS and ending inventory calculation, impacting financial statements and tax liabilities.