Recordsof the Genesis Corporation reveal the following information aboutinventor

ID: 2433597 • Letter: R

Question

Recordsof the Genesis Corporation reveal the following information aboutinventory during

theyear.

January1 Beginning inventory 1,000 units @$10

March15 Purchase of inventory 3,500 units @$12

July 21Sale of inventory 4,000units

September 12 Purchase of inventory 1,600 units @$14

October31 Sale of inventory 1,200units

Thecompany’s accountant is trying to decide whether to determineCost of Goods Sold using

theperpetual inventory system (calculating Cost of Goods Sold afterevery sale) or the periodic

inventory system (calculating Cost of Goods Sold at the end ofthe year only).Assume thecompany

usesthe LIFO method for inventorycosting.

Required Usingthe information given above, answer each of the followingquestions.

A. Howmany units have been sold? How many units remain in endinginventory?

B. Whatis Cost of Goods Sold using the perpetual method? The periodicmethod? What is

thecost of ending inventory for eachmethod?

C. Isthere a difference in net income for each method? Why? (Assume forpurposes of this

question that Sales Revenue is $85,000 and all other expensesare $5,600.)

D. Whatare the advantages of using perpetual? Usingperiodic?

x.Xnt size="3"> Perpetual inventory system Units Total CostJanuary 1 Beginning inventory 1,000 @ $10 $10,000

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