Reference no: EM132487582

Innovation Cycles uses the FIFO inventory method. Innovation started March with 10 bicycles that cost $60 each. On March 16, Innovation bought 20 bicycles at $70 each. On March 31, Innovation sold 25 bicycles.

Requirements:

Question 1: Prepare Innovation's perpetual inventory record.

Review the facts on Innovation Cycles in problem

Requirements: 

Question 2: Prepare perpetual inventory record for the LIFO method.

Review the facts on Innovation Cycles in problem.

Requirement:

Question 3: Prepare perpetual inventory record for the average-cost method. Round average cost per unit to the nearest cent and all other amounts to the nearest dollar.

Use the Innovation Cycles data journalize.

Requirement:

Question 4: The March 16 purchase of inventory on account. R2. The March 31 sale of inventory on account. Innovation sold each bicycle for $120. R3. Cost of goods sold under FIFO on March 31.

Use the Innovation Cycles data in problem to journalize.

Requirements:

Question 5: The March 16 purchase of inventory on account. R2. The March 31 sale of inventory on account. Innovation sold each bicycle for $120. R3. The Cost of goods sold under LIFO on March 31.

Use the Innovation Cycles data in problem to journalize.

Question 6: The March 16 purchase of inventory on account. R2. The March 31 sale of inventory on account. Innovation sold each bicycle for $120. R3. The Cost of goods sold under average cost on March 31.

After completing those exercises, answer the following questions:

Requirement

Question 7: Which method of inventory accounting produced the lowest cost of goods sold?

Question 8: Which method of inventory accounting produced the highest cost of goods sold?

Question 9: If prices had been declining instead of rising, which inventory method would have produced the highest cost of goods sold?