Question:2 3M reports following for the month of April. Unit cost or Units selling price Date Explanation 1-Apr Inventory 120 65 7-Apr Purchase 70 75 12-Apr Sale 60 130 22-Apr Purchase 70 85 25-Apr Sale 40 140 30-Apr Inventory 160 a) For cach of the following assumptions, calculate (i) ending inventory, (ii) cost of goods sol & (iii) gross profit. [3*3] 1. FIFO 2. LIFO 3. Average cost b) Which method gives higher net income? Why? [0.5] c) Which method results in the higher income taxes? Why? [0.5]
Question:2 3M reports following for the month of April. Unit cost or Units selling price Date Explanation 1-Apr Inventory 120 65 7-Apr Purchase 70 75 12-Apr Sale 60 130 22-Apr Purchase 70 85 25-Apr Sale 40 140 30-Apr Inventory 160 a) For cach of the following assumptions, calculate (i) ending inventory, (ii) cost of goods sol & (iii) gross profit. [3*3] 1. FIFO 2. LIFO 3. Average cost b) Which method gives higher net income? Why? [0.5] c) Which method results in the higher income taxes? Why? [0.5]
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter6: Cost Of Goods Sold And Inventory
Section: Chapter Questions
Problem 32CE: ( Appendix 6B) Inventory Costing Methods: Periodic Average Cost Refer to the information for...
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