URWU N OLU U UI U a LURU U, LIL aL Units 1, 600 Unit Cost $ 45 Transactions Beginning inventory, January 1 Transactions dur ing the year: a. Purchase, January 30 b. Sale, March 14 ($100 each) e. Purchase, May 1 d. Sale, August 31 ($100 each) 2, 300 (1,250) 1, 000 (1, 500) 49 75 Assuming that for Specific identification method (item 1d) the March 14 sale was selected two-fifths from the beginning inventory and three-fifths from the purchase of January 30. Required: 1. Compute the amount of goods available for sale, ending inventory, and cost of goods sold at December 31 under each of the following inventory costing methods: a. Last-in, first-out. b. Weighted average cost. c First-in, first-out. d. Specific identification, assuming that the March 14 sale was selected two-fifths from the beginning inventory and three-fifths from the purchase of January 30. Assume that the sale of August 31 was selected from the remainder of the beginning inventory, with the balance from the purchase of May 1. 2-a. Of the four methods, which will result in the highest gross profit? 2-b. Of the four methods, which will result in the lowest income taxes?
URWU N OLU U UI U a LURU U, LIL aL Units 1, 600 Unit Cost $ 45 Transactions Beginning inventory, January 1 Transactions dur ing the year: a. Purchase, January 30 b. Sale, March 14 ($100 each) e. Purchase, May 1 d. Sale, August 31 ($100 each) 2, 300 (1,250) 1, 000 (1, 500) 49 75 Assuming that for Specific identification method (item 1d) the March 14 sale was selected two-fifths from the beginning inventory and three-fifths from the purchase of January 30. Required: 1. Compute the amount of goods available for sale, ending inventory, and cost of goods sold at December 31 under each of the following inventory costing methods: a. Last-in, first-out. b. Weighted average cost. c First-in, first-out. d. Specific identification, assuming that the March 14 sale was selected two-fifths from the beginning inventory and three-fifths from the purchase of January 30. Assume that the sale of August 31 was selected from the remainder of the beginning inventory, with the balance from the purchase of May 1. 2-a. Of the four methods, which will result in the highest gross profit? 2-b. Of the four methods, which will result in the lowest income taxes?
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 51E: Inventory Costing Methods On June 1, Welding Products Company had a beginning inventory of 210 cases...
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