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 4,000 $ 30 For the year: b. Purchase, March 5 10,000 31 c. Purchase, September 19 6,000 33 d. Sale, April 15 (sold for $75 per unit) 4,400 e. Sale, October 31 (sold for $78 per unit) 9,000 f. Operating expenses (excluding income tax expense), $607,000 Required: Calculate the number and cost of goods available for sale. Calculate the number of units in ending inventory. Compute the cost of ending inventory and cost of goods sold under (a) FIFO, (b) LIFO, and (c) weighted average cost. Prepare an income statement that shows the FIFO method, LIFO method and weighted average method. Which inventory costing method minimizes income taxes?
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 4,000 $ 30 For the year: b. Purchase, March 5 10,000 31 c. Purchase, September 19 6,000 33 d. Sale, April 15 (sold for $75 per unit) 4,400 e. Sale, October 31 (sold for $78 per unit) 9,000 f. Operating expenses (excluding income tax expense), $607,000 Required: Calculate the number and cost of goods available for sale. Calculate the number of units in ending inventory. Compute the cost of ending inventory and cost of goods sold under (a) FIFO, (b) LIFO, and (c) weighted average cost. Prepare an income statement that shows the FIFO method, LIFO method and weighted average method. Which inventory costing method minimizes income taxes?
Financial Accounting
15th Edition
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter7: Inventories
Section: Chapter Questions
Problem 4PB: The beginning inventory for Dunne Co. and data on purchases and sales for a three-month period are...
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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 |
|
4,000 |
|
$ |
30 |
|
For the year: |
|
|
|
|
|
|
b. Purchase, March 5 |
|
10,000 |
|
|
31 |
|
c. Purchase, September 19 |
|
6,000 |
|
|
33 |
|
d. Sale, April 15 (sold for $75 per unit) |
|
4,400 |
|
|
|
|
e. Sale, October 31 (sold for $78 per unit) |
|
9,000 |
|
|
|
|
f. Operating expenses (excluding income tax expense), $607,000 |
|
|
|
|
|
|
Required:
- Calculate the number and cost of goods available for sale.
- Calculate the number of units in ending inventory.
- Compute the cost of ending inventory and cost of goods sold under (a) FIFO, (b) LIFO, and (c) weighted average cost.
- Prepare an income statement that shows the FIFO method, LIFO method and weighted average method.
- Which inventory costing method minimizes income taxes?
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