Explain the step by step instructions given the following data for the questions below.       Units Price Beginning Inventory 200 $1.20 First Purchase 400 $1.30 Second Purchase 250 $1.40 Sales 550 $2.00   Assuming a FIFO cost flow, the amount of cost of goods sold reported on the income statement would be what? Assuming a LIFO cost flow, the amount of ending inventory reported on the balance sheet would be what? Assuming a weighted average cost flow, the amount of ending inventory reported on the balance sheet would be (round the final answer to the nearest dollar) would be what? In a period of rising prices, which inventory cost flow method results in the lowest balance sheet figure for inventory? In a period of rising prices, which inventory cost flow method results in the lowest income tax liability, all other things being equal?

Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter8: Inventories: Special Valuation Issues
Section: Chapter Questions
Problem 13E: Retail Inventory Method The following information relates to the retail inventory method used by...
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Explain the step by step instructions given the following data for the questions below.  

 

 

Units

Price

Beginning Inventory

200

$1.20

First Purchase

400

$1.30

Second Purchase

250

$1.40

Sales

550

$2.00

 

  1. Assuming a FIFO cost flow, the amount of cost of goods sold reported on the income statement would be what?
  2. Assuming a LIFO cost flow, the amount of ending inventory reported on the balance sheet would be what?
  3. Assuming a weighted average cost flow, the amount of ending inventory reported on the balance sheet would be (round the final answer to the nearest dollar) would be what?
  4. In a period of rising prices, which inventory cost flow method results in the lowest balance sheet figure for inventory?
  5. In a period of rising prices, which inventory cost flow method results in the lowest income tax liability, all other things being equal?
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