Use the following information to calculate the ending inventory cost on December 31 and the cost of goods sold for December under each of three…

1.Use the following information to calculate the ending inventory cost on December 31 and the cost of goods sold for December under each of three methods: (a) FIFO, (b) LIFO, and (c) Weighted Average. Assume the periodic inventory system is used. (Show your work.)

Dec.  1 Beginning inventory 1,000 units @ $7

5 Purchased 3,000 units @ $7.10

18 Purchased 4,000 units @ $7.15

24 Purchased 2,000 units @ $7.20

31 Ending inventory 2,500 units

2. Assuming that ending inventory for 20×7 was overstated, indicate whether each of the following will be understated (U), overstated (O), or not affected (N).

_____

1. Beginning inventory for 20×8

_____ 2. Cost of goods sold for 20×7

_____ 3. Stockholders’ equity at the end of 20×8

_____ 4. Income before income taxes for 20×8

_____ 5. Stockholders’ equity at the end of 20×7

_____ 6. Cost of goods sold for 20×8

_____ 7. Income before income taxes for 20×7