Problem 5-8AA Periodic: Income comparisons and cost flows L O A1, P3 QP Corp. so

Question

Problem 5-8AA Periodic: Income comparisons and cost flows L O A1, P3 QP Corp. sold 5,390 units of its product at $46.10 per unit in year 2015 and incurred operating expenses cf 10 per unit in selling the units. It began the year with 710 units in inventory and made successive Feb. 20 Purchase May 16 Oct. 3 Purchase Dec. 11 Purchase 710 units$19.10 per unit 1,610 units$20.10 per unit 810 units $21.10 per unit 510 units $22.10 per unit 3,410 units$23.10 per unit Total 7,050 units Required: 1. Prepare comparative income statements for the three inventory costing methods of FIFO, LIFO weighted average which includes a detailed cost of goods sold section as part of each statement.1 company uses a periodic inventory system, and its income tax rate is 40%. (Round your average cost per unit to 2 decimal places.) QP CORP Income Statements Comparing FIFO, LIFO, and Weighted Average For Year Ended December 31, 2015 Weighted FIFo LIFO 248,479 $ 248.479 $248.479 Cost of goods sold 13.561 13.561 13.561 Cost of purchases 13.561 13.561 13.561 Less: Inventory, Dec. 31. 2015 13,561 234.918 38,269 196,649 13,561 234.918 38,269 196.649196 649 Cost of goods sold 13.561 38.269 S196.649 S 196 649 S196.649

Explanation / Answer

CALCULATION OF COST OF GOODS SOLD UNDER FIFO METHOD LIFO METHOD & WEIGHTED AVERAGE METHOD Purchases Date Particulars Units (A) Rate Per unit Total Cost Opening Stock 710 19.10 13561 Purchases in Feb 20 1610 20.10 $32,361 Purchases in May 16 810 21.10 $17,091 Purchases in Oct 03 510 22.10 $11,271 Purchases in Dec 11 3410 23.10 $78,771 Total Goods Available for Sale 7050 153055 Less: Sales 5390 Closing Stock 1660 Weighted Average cost per unit = $ 153,055 / 7050 untis = $21.71 So, Cost of Goods Sold under FIFO methd will be as below, Balance as on Purhcase dec 31 2015 1660 $23.1 $38,346 So, Cost of Goods Sold under LIFO methd will be as below, From Opening Stock 710 $19.1 $13,561 From Purchases in Feb 20 950 $20.1 $19,095 Balance as on Purhcase dec 31 2015 1660 $32,656 Closing Stock as per Weighted average 1660 $21.71 $36,038.48 FIFO LIFO Weighted Sales $2,48,479 $2,48,479 $2,48,479 Cost of Goods sold Inventory , dec 31 2014 $13,561 $13,561 $13,561 Add : Cost of Purchases $1,53,055 $1,53,055 $1,53,055 Cost of Goods available for sale $1,66,616 $1,66,616 $1,66,616 Less: Inventory , dec 31 2015 $38,346 $32,656 $36,038 Cost of Goods sold $1,28,270 $1,33,960 $1,30,578 Gross Profit $1,20,209 $1,14,519 $1,17,901 Operating Expenses 38269 38269 38269 Income before taxes $81,940 $76,250 $79,632 Income taxes @ 40% $32,776 $30,500 $31,853 Net income $49,164 $45,750 $47,779

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