Homework: Chapter 6 - Graded Homework Score: 0 of 5 pts 40f 4 (0 complete) P6A-3

Question

Homework: Chapter 6 - Graded Homework Score: 0 of 5 pts 40f 4 (0 complete) P6A-32A (similar to) units of merchandise inventory that cost S60 each. During December, the store made the following purchases: (Click the icon to view the purchases.) Now uses the periodic inventory system, and the physical count at December 31 indicates that 140 units of merchandise inventory are on hand. Read the requirements Requirement 1. Determine the ending merchandise inventory and cost of goods sold amounts for the December financial statements using the FIFO, LIFO FIFO Ending inventory Cost of goods sold

Explanation / Answer

Average Method Closing Date Description Quantity Unit Cost or Value Quantity Unit Cost or Inventory Cost of Sales Selling Price Selling Price December             1 Beginning inventory                  90              60          5,400             90           60        5,400 December             3 Purchase                  60              80          4,800           150           68       10,200 December           12 Purchase                  70              82          5,740           220           72       15,940 December           18 Purchase                  60              89          5,340           280           76       21,280 December           31 Cost of Sales                (140)              76       (10,640)           140           76       10,640       10,640       10,640       10,640 FiFO Method Closing Date Description Quantity Unit Cost or Value Quantity Unit Cost or Inventory Cost of Sales Selling Price Selling Price December             1 Beginning inventory                  90              60          5,400             90           60        5,400 December             3 Purchase                  60              80          4,800           150           68       10,200 December           12 Purchase                  70              82          5,740           220           72       15,940 December           18 Purchase                  60              89          5,340           280           76       21,280 December           31 Cost of Sales                (140)         (9,400)           140       11,880        9,400       11,880        9,400 Note: Cost of Sales=90*60+50*80 LiFO Method Closing Date Description Quantity Unit Cost or Value Quantity Unit Cost or Inventory Cost of Sales Selling Price Selling Price December             1 Beginning inventory                  90              60          5,400             90           60        5,400 December             3 Purchase                  60              80          4,800           150           68       10,200 December           12 Purchase                  70              82          5,740           220           72       15,940 December           18 Purchase                  60              89          5,340           280           76       21,280 December           31 Cost of Sales                (140)       (11,880)           140        9,400       11,880        9,400       11,880 Note: Cost of Sales=60*89+70*82+10*80 b. W. Average FIFO LIFO Sales       30,000        30,000       30,000 Cost of Sales       10,640          9,400       11,880 Gross Profit       19,360        20,600       18,120 c LIFO Method in this partcular case will give lower income tax due to lower gross profit as compare to other method FIFO Method in this partcular case will give Highet income tax due to lower cost of goods sold

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