E7-7 Analyzing and Interpreting the Financial Statement Effects of FIFO, LIFO, and Weighted Average Cost [LO 7-3]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.  TransactionsUnitsUnit Costa. Inventory, Beginning 1,500 $28 For the year:      b. Purchase, March 5 7,500  29 c. Purchase, September 19 3,500  31 d. Sale, April 15 (sold for $73 per unit) 2,200    e. Sale, October 31 (sold for $76 per unit) 6,500    f. Operating expenses (excluding income tax expense), $398,000         Required:1. Calculate the number and cost of goods available for sale.2. Calculate 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.4. Prepare an income statement that shows the FIFO method, LIFO method and weighted average method.6. Which inventory costing method minimizes income taxes?

Question
Asked Mar 23, 2019

E7-7 Analyzing and Interpreting the Financial Statement Effects of FIFO, LIFO, and Weighted Average Cost [LO 7-3]

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.

  

Transactions Units Unit Cost
a. Inventory, Beginning   1,500   $ 28  
For the year:            
b. Purchase, March 5   7,500     29  
c. Purchase, September 19   3,500     31  
d. Sale, April 15 (sold for $73 per unit)   2,200        
e. Sale, October 31 (sold for $76 per unit)   6,500        
f. Operating expenses (excluding income tax expense), $398,000            
 

  

Required:

  1. 1. Calculate the number and cost of goods available for sale.
  2. 2. Calculate the number of units in ending inventory.
  3. 3. Compute the cost of ending inventory and cost of goods sold under (a) FIFO, (b) LIFO, and (c) weighted average cost.
  4. 4. Prepare an income statement that shows the FIFO method, LIFO method and weighted average method.
  5. 6. Which inventory costing method minimizes income taxes?

 

 

 

 

check_circle

Expert Answer

Step 1

Hey, since there are multiple questions posted, we will answer first three question. If you want any specific question(s) to be answered then please submit that question only or specify the question number in your message.

Step 2

1.

Calcualte number and total amount for cost of goods available for sale:

 

fullscreen
Step 3

Conclusion:

Therefore, Number of cost of goods availabe for sale is 12,500 units, and Cost of go...

Want to see the full answer?

See Solution

Check out a sample Q&A here.

Want to see this answer and more?

Solutions are written by subject experts who are available 24/7. Questions are typically answered within 1 hour.*

See Solution
*Response times may vary by subject and question.
Tagged in

Business

Accounting

Cost Accounting

Related Accounting Q&A

Find answers to questions asked by student like you

Show more Q&A add
question_answer

Q: The following information is taken from the current year financial statement of EC (dollar figures a...

A: Loss from continuing operations: It refers to the loss incurred from ongoing business, it can be cal...

question_answer

Q: Why are cash equivalents included with cash in a statement of cash flows?

A: Cash equivalents: Instead of keeping idle cash during high interest rates, the companies invest cash...

question_answer

Q: Process Costing in Sugar Manufacturing The food-processing industry, like most process industries, i...

A: Process Costing: It is a method of cost accounting used by an enterprise with processes categorised ...

question_answer

Q: Which of the following is correct? The gain basis for property received by gift is the lesser of th...

A: The tax basis of inherited or gifted property: Various tax rules are given under Federal tax in orde...

question_answer

Q: Engines Done Right Co. is trying to establish the standard labor cost of a typical engine tune-up. T...

A: Direct labor variances:The difference between the actual labor cost in the production and the standa...

question_answer

Q: Hagen Company’s budgeted sales and direct materials purchase are as follows.   Budgeted Sales ...

A: Expected cash collection from customers in March is the sum of cash sales in March, 36% of credit sa...

question_answer

Q: The market price for a product has been $50 per unit, but competitive pressures have reduced the mar...

A: Manufacturing costs: Manufacturing costs are the costs which are involved in converting the raw mate...

question_answer

Q: Problem 14-2 Concord Co. is building a new hockey arena at a cost of $2,620,000. It received a downp...

A: 1. Bond issue price= Present value of bonds redemption price + present value of interest annuities p...

question_answer

Q: How I recorded the following transactions in general journal for BM, Inc. Include with a brief expla...

A: Transaction 1:Cash is a current asset, and it is increased. Therefore, debit cash account for $360,0...