l Verizon 10:42 AM ezto.mheducation.com 10.00 points OP Corp. sold 5,330 units o
ID: 2557066 • Letter: L
Question
l Verizon 10:42 AM ezto.mheducation.com 10.00 points OP Corp. sold 5,330 units of its product at $46.70 per unit in year 2015 and incurred operating expenses of $7.70 per unit in selling the units. It began the year with 770 units in inventory and made successive purchases of its product as follows Required: 1. Prepare comparative income statements for the three inventory costing methods of FIFO, LIFO, and weighted average which ncludes a detailed cost of goods sold section as part of each statement. The company uses a periodic inventory system, and its income tax rate is 40%. (Round your average cost per unit to 2 decimal places) elerences Be&Resources;
Explanation / Answer
Answer = CALCULATION OF COST OF ENDING INVENTORY AND COST OF GOODS SOLD UNDER FIFO METHOD PURHASES & Opening Stock COST OF GOODS SOLD CLOSING BALANCE Date Particulars Units (A) Rate Per unit Total Cost Units (A) Rate Per unit Total Cost Units (A) Rate Per unit Total Cost Jan, 01 Beginning inventory 1/1 770 $ 19.70 $ 15,169.00 770 $ 19.70 $15,169.00 Feb, 20 Purchases 1670 20.7 $ 34,569.00 770 $ 19.70 $15,169.00 1670 20.7 $34,569 May, 16 Purchases 870 21.7 $ 18,879.00 770 $ 19.70 $15,169.00 1670 20.7 $34,569 870 21.7 $18,879.00 OCt, 03 Purchases 570 22.7 $ 12,939.00 770 $ 19.70 $15,169.00 1670 20.7 $34,569 870 21.7 $18,879.00 570 22.7 $12,939.00 Dec , 11 Purchases 3470 23.7 $ 82,239.00 770 $ 19.70 $15,169.00 1670 20.7 $34,569 Available For sale 870 21.7 $18,879.00 Sales 570 22.7 $12,939.00 Closing Stock 12/31 3470 23.7 $82,239.00 Total Goods Available for Sales 7350 $ 1,63,795.00 Sales in the year 2015 under FIFO 5330 770 $ 19.70 $ 15,169.00 1670 20.7 $34,569 870 21.7 $ 18,879.00 570 22.7 $ 12,939.00 1450 23.7 $ 34,365.00 2020 23.7 $47,874.00 Total 5330 $ 1,15,921 2020 $47,874.00 Unit Amoun COGS as per FIFO Method 5330 $1,15,921.00 Closing Balance as per FIFO 2020 47874 CALCULATION OF COST OF ENDING INVENTORY AND COST OF GOODS SOLD UNDER LIFO METHOD PURHASES COST OF GOODS SOLD CLOSING BALANCE Date Particulars Units (A) Rate Per unit Total Cost Units (A) Rate Per unit Total Cost Units (A) Rate Per unit Total Cost Jan, 01 Beginning inventory 1/1 770 $ 19.70 $ 15,169.00 770 $ 19.70 $15,169.00 Feb, 20 Purchases 1670 20.7 $ 34,569.00 770 $ 19.70 $15,169.00 1670 20.7 $34,569 May, 16 Purchases 870 21.7 $ 18,879.00 770 $ 19.70 $15,169.00 1670 20.7 $34,569 870 21.7 $18,879.00 OCt, 03 Purchases 570 22.7 $ 12,939.00 770 $ 19.70 $15,169.00 1670 20.7 $34,569 870 21.7 $18,879.00 570 22.7 $12,939.00 Dec , 11 Purchases 3470 23.7 $ 82,239.00 770 $ 19.70 $15,169.00 1670 20.7 $34,569 Available For sale 870 21.7 $18,879.00 Sales 570 22.7 $12,939.00 Closing Stock 12/31 3470 23.7 $82,239.00 Total Goods Available for Sales 7350 $ 1,63,795.00 Sales in the year 2015 under FIFO 5330 420 20.7 $8,694 870 21.7 $ 18,879.00 570 22.7 $ 12,939.00 3470 23.7 $ 82,239.00 770 $ 19.70 $15,169.00 1250 20.7 $25,875 Total 5330 122751 2020 41044 CALCULATION OF THE UNIT COST AS PER AVERAGE COST METHOD Units (A) Rate Per unit Total Cost Beginning inventory 1/1 770 $ 19.70 $ 15,169.00 Purchase 1 1670 20.7 $ 34,569.00 Purchase 2 870 21.7 $ 18,879.00 Purchase 3 570 22.7 $ 12,939.00 Purchase 4 3470 23.7 $ 82,239.00 Total 7350 $ 1,63,795.00 Average Unit Cost = 1,63,795.00 "/" By $ 7,350.00 Average Unit Cost = $ 22.29 Per Units Cost of goods sold = $ 5,330.00 "X" By $ 22.29 Cost of goods sold = 1,18,779.23 Closing stock = 2,020.00 "X" By $ 22.29 Closing stock = $ 45,016 FIFO LIFO Average Cost Sales $2,48,911.00 $2,48,911.00 $2,48,911.00 Cost OF Goods Sold Opening Stock $15,169.00 $15,169.00 $15,169.00 Add: Purchases $1,48,626.00 $1,48,626.00 $1,48,626.00 Cost OF Goods Available for Sold $1,63,795.00 $1,63,795.00 $1,63,795.00 Less: Closing Stcok $47,874.00 $41,044.00 $45,015.77 Cost of Goods Sold $1,15,921.00 $1,22,751.00 $1,18,779.23 Gross Profit $1,32,990.00 $1,26,160.00 $1,30,131.77 Less : Operating Expenses $41,041.00 $41,041.00 $41,041.00 (5,330 X $ 7.70) (5,330 X $ 7.70) (5,330 X $ 7.70) Income before Taxes $91,949.00 $85,119.00 $89,090.77 Income tax Expenses @ 40% $36,779.60 $34,047.60 $35,636.31 Net income $55,169.40 $51,071.40 $53,454.46
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