Stengel Company sells a snowboard, White-Out, that is popular with snowboard enthusiasts. Presented below is information relating to Stengel Company's purchases of White-Out snowboards during September. During the same month, 124 White-Out snowboards were sold at $160 each. Stengel Company uses a periodic inventory system. Instructions
(a) Compute the ending inventory at September 30 and cost of goods sold using the FIFO and LIFO method. Prove the amount allocated to cost of goods sold under each method.
(b) For both FIFO and LIFO, calculate the sum of inventory and cost of goods sold. What do you notice about the answer you found for each method?
(c) What is gross profit under each method?
(d) Which method results in a larger amount reported for assets on the balance sheet? Which results in a larger amount reported for stockholders' equity on the balance sheet?

Question

Stengel Company sells a snowboard, White-Out, that is popular with snowboard enthusiasts. Presented below is information relating to Stengel Company's purchases of White-Out snowboards during September. During the same month, 124 White-Out snowboards were sold at $160 each. Stengel Company uses a periodic inventory system.  Instructions
(a) Compute the ending inventory at September 30 and cost of goods sold using the FIFO and LIFO method. Prove the amount allocated to cost of goods sold under each method.
(b) For both FIFO and LIFO, calculate the sum of inventory and cost of goods sold. What do you notice about the answer you found for each method?
(c) What is gross profit under each method?
(d) Which method results in a larger amount reported for assets on the balance sheet? Which results in a larger amount reported for stockholders' equity on the balance sheet?

Quizplus · Accepted Answer

The Answer of Stengel Company sells a snowboard, White-Out, that is popular with snowboard enthusiasts. Presented below is information relating to Stengel Company's purchases of White-Out snowboards during September. During the same month, 124 White-Out snowboards were sold at $160 each. Stengel Company uses a periodic inventory system.  Instructions
(a) Compute the ending inventory at September 30 and cost of goods sold using the FIFO and LIFO method. Prove the amount allocated to cost of goods sold under each method.
(b) For both FIFO and LIFO, calculate the sum of inventory and cost of goods sold. What do you notice about the answer you found for each method?
(c) What is gross profit under each method?
(d) Which method results in a larger amount reported for assets on the balance sheet? Which results in a larger amount reported for stockholders' equity on the balance sheet?

Stengel Company Sells a Snowboard, White-Out, That Is Popular with Snowboard