iPad 8:01 PM 55% Scoresby Inc. tracks the number of units purchased and sold thr
ID: 341088 • Letter: I
Question
iPad 8:01 PM 55% Scoresby Inc. tracks the number of units purchased and sold throughout each year but applies its inventory costing method at the end of the year, as if it uses a periodic inventory system. Assume its accounting records provided the following information at the end of the annual accounting period, December 31 1,500 $30 For the year b. Purchase, March 5 c. Purchase, September 19 d. Sale, April 15 (sold for $75 per unit) e. Sale, October 31 (sold for $78 per unit) t. Operating expenses (excluding income tax expense), $393,000 7,500 3,500 2,100 6,500 31 Required 1. Caloulate the number and cost of goods avalable for sale. Cost e Goods Avalable for Sale 2. Caloulate the number of units in ending inventory 3. Compute the cost of ending inventory and cost of goods sold under (a) FIFO, (b) LIFO, and (c)weighted average cost Cost of Ending Cost of Sold LIFO Weighted Average Cost 4. Prepare an income statement that shows the FIFO method, LIFO method and weighted average metnod Income Statement For the Year Ended December 31 Weighted LIFO Income (Loss) from Operations 6. Which inventory costing method minimizes income taxes?Explanation / Answer
Solution 1.1:
Number of goods available for sale = Opening inventory + Purchases = 1500 + 7500 + 3500 = 12500 units
Cost of goods available for sale = (1500 * $30) + (7500*$31) + (3500*$33) = $393000
Solution 1.2:
Number of unit in ending inventory = number of goods available for sale - unit sold
= 12500 - 2100 - 6500 = 3900 units
Solution 1.3:
Solution 1.4:
Method which minimize income tax is the method which show lowest income i.e. LIFO method
Computation of Ending Inventory and COGS (FIFO) Particulars Amount Units in ending inventory 3900 Units avaialbe in Stock belongs to:3500 units purchased on Sep 19 @ $33 per unit
400 from purchased on Mar 5 @ $31 per unit Value of ending inventory (3500*$33 + 400*$31) $127,900.00 Cost of goods available for sale $393,000.00 Cost of goods sold (Cost of goods availble for sale - Value of ending inventory) $265,100.00
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