Three identical units of merchandise were purchased during July, as follows: Assume one unit sells on July 28 for $45.Determine the gross profit, cost of goods sold, and ending inventory on July 31 using (a) first-in, first-out, (b) last-in, first-out, and (c) average cost flow methods.

Average Cost

A method of inventory valuation that calculates the cost of goods sold and ending inventory based on the weighted average cost of all goods available for sale.

First-In, First-Out

An inventory valuation method where the cost of the earliest goods purchased are the first to be recognized in determining cost of goods sold.

Last-In, First-Out

An inventory valuation method where the costs of the most recently acquired items are the first to be expensed.