Question Part1. Please explain how to complete 1-b below.Daniel Company uses a periodic inventory system. Data for the current year: beginning merchandise inventory (ending inventory December 31, prior year), 2,080 units at $38; purchases, 7,910 units at $40; expenses (excluding income taxes), $193,700; ending inventory per physical count at December 31, current year, 1,710 units; sales, 8,280 units; sales price per unit, $75; and average income tax rate, 36 percent. Required:1-a. Compute cost of goods sold under the FIFO, LIFO, and average cost inventory costing methods.1-b. Prepare income statements under the FIFO, LIFO, and average cost inventory costing methods.Prepare income statements under the FIFO, LIFO, and average cost inventory costing methods. (Do not round your intermediate calculations. Round your final answers to the nearest whole dollar amount.) Question Part2: Please explain how to calculate the Net Income the Income Taxes paid and determine between FIFO and LIFO, which method is preferable in terms of (a) net income and (b) income taxes paid (cash flow)?Daniel Company uses a periodic inventory system. Data for the current year: beginning merchandise inventory (ending inventory December 31, prior year), 2,080 units at $38; purchases, 7,910 units at $40; expenses (excluding income taxes), $193,700; ending inventory per physical count at December 31, current year, 1,710 units; sales, 8,280 units; sales price per unit, $75; and average income tax rate, 36 percent.

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Asked Oct 22, 2019
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Question Part1. Please explain how to complete 1-b below.

Daniel Company uses a periodic inventory system. Data for the current year: beginning merchandise inventory (ending inventory December 31, prior year), 2,080 units at $38; purchases, 7,910 units at $40; expenses (excluding income taxes), $193,700; ending inventory per physical count at December 31, current year, 1,710 units; sales, 8,280 units; sales price per unit, $75; and average income tax rate, 36 percent.

 

Required:

1-a. Compute cost of goods sold under the FIFO, LIFO, and average cost inventory costing methods.

1-b. Prepare income statements under the FIFO, LIFO, and average cost inventory costing methods.
Prepare income statements under the FIFO, LIFO, and average cost inventory costing methods. (Do not round your intermediate calculations. Round your final answers to the nearest whole dollar amount.)

 

Question Part2: Please explain how to calculate the Net Income the Income Taxes paid and determine between FIFO and LIFO, which method is preferable in terms of (a) net income and (b) income taxes paid (cash flow)?

Daniel Company uses a periodic inventory system. Data for the current year: beginning merchandise inventory (ending inventory December 31, prior year), 2,080 units at $38; purchases, 7,910 units at $40; expenses (excluding income taxes), $193,700; ending inventory per physical count at December 31, current year, 1,710 units; sales, 8,280 units; sales price per unit, $75; and average income tax rate, 36 percent.

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Expert Answer

Step 1

A financial statement of company which shows the loss or profit of the company for a period is referred as income statement of the company. It shows the data of cost, revenue & expenses of the company for a period.

Step 2

First, cost of goods sold under LIFO, FIFO and Av...

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Inventory costing method FIFO (S) LIFO (S) 79,040 316,400 395,440 68.400 327,040 Particulars Average Cost (S) 79,040 316,400 Units Beginning inventory Add: purchases Goods available for sales Less: ending inventory Cost of goods sold 79,040 316,400 2,080 7,910 9,990 1,710 8.280 395,440 64,980 330,460 395,440 67,688 327,752

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