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    Cushing Inc: Cost-flow assumptions, FIFO and LIFO using periodic and perpetual systems

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    Cost-flow assumptions-FIFO and LIFO using periodic and perpetual systems.
    The inventory records of Cushing, Inc., reflected the following information for the year ended December 31, 2004:

    # of unit Unit Cost Total Cost
    Inventory, January 1 . . . . . . . . . . . . . . . . 100 $13 $1,300
    Purchases:
    May 30 . . . . . . . . . . . . . . . . . . . . . . . . . . 160 15 2,400
    September 28 . . . . . . . . . . . . . . . . . . . . 200 16 3,200

    Goods available for sale . . . . . . . . . . . . . 460 $6,900

    Sales:
    February 22 . . . . . . . . . . . . . . . . . . . . . . (70)
    June 11 . . . . . . . . . . . . . . . . . . . . . . . . . (150)
    November 1 . . . . . . . . . . . . . . . . . . . . . . (190)

    Inventory, December 31 . . . . . . . . . . . . . . 50

    Required:
    a. Assume that Cushing, Inc., uses a periodic inventory system. Calculate cost
    of goods sold and ending inventory under FIFO and LIFO.
    b. Assume that Cushing, Inc., uses a perpetual inventory system. Calculate cost
    of goods sold and ending inventory under FIFO and LIFO.
    c. Explain why the FIFO results for cost of goods sold and ending inventory
    are the same in your answers to parts a and b, but the LIFO results are
    different.
    d. Explain why the results from the LIFO periodic calculations in part a cannot
    possibly represent the actual physical flow of inventory items.

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