inventory valuation methods computations and concepts wave riders surfboard company 502432

Inventory valuation methods: computations and concepts. Wave Riders Surfboard Company began business on January 1 of the current year. Below are the transactions for the year

:

1/3:

Purchase 100 boards @$125

3/17:

Sold 50 boards @ $250

4/3:

Purchase 200 boards @$135

5/17:

Sold 75 boards @ $250

6/3:

Purchase 100 boards @$145

1/3:

Purchase 100 boards @$155

3/17:

Sold 300 boards @ $250

1/3:

Purchase 100 boards @$140

Wave Riders uses a perpetual inventory system.

Instructions

a. Calculate cost of goods sold, ending inventory, and gross profit under each of the following inventory valuation methods:

• First-in, first-out
• Last-in, first-out
• Weighted average

b. Which of the three methods would be chosen if management’s goal is to

(1) produce an up-to-date inventory valuation on the balance sheet?

(2) approximate the physical flow of a sand and gravel dealer?