3. The following information is available for Heller Company

Beginning inventory

Cost of goods sold

Ending inventory

Sales revenue

Instructions

Compute each of the following

Inventory turnover.

Days in inventory

(a)

(b)

SHOW YOUR WORK

(a) Inventory tumover

(b) Days in inventory

Inventory

Method

365

Average

Cost

FIFO

=

EXTRA CREDIT: (5 PTS)

Your former college roommate is opening a new retail store and asks you "Which inventory costing

method should I use?"

LIFO

What is your response? Include a comparison of the tax effect, balance sheet effect, and income

statement effect for AVERAGE COST, FIFO and LIFO

$ 60,000

640,000

100,000

1,000,000

days

Tax Effect

Income Statement Effect

Balance Sheet Effect