Question

Courtney Company uses a periodic inventory system. The following data were available: beginning inventory, 1,500 units at $25; purchases, 3,000 units at $28; operating expenses (excluding income taxes), $94,000; ending inventory per physical count at December 31, 1,000 units; sales price per unit, $75; and average income tax rate, 30%.

Prepare income statements under the FIFO, LIFO, and weighted average costing methods.

PLEASE do not round intermediate calculations but can you round the final answers to the nearest dollar amount

Income Statement Units FIFO L IFO Weighted Average ol Sales Revenue Cost of Goods Sold* Gross Profit Operating Expenses Income from Operations Income Tax Expense Net Income 0 0 0 $ 0 $ Units FIFO LEO Weighted Average *Cost of Goods Sold Equation: Beginning Inventory Purchases Goods Available for Sale Ending Inventory Cost of Goods Sold 0 0 0 0 0 % 0 % 0 % 0

Between FIFO and LIFO, which method is preferable in terms of maximizing income from operations, if costs are rising?

Between FIFO and LIFO, which method is preferable in terms of minimizing income taxes, if costs are rising?

Between FIFO and LIFO, which method is preferable in terms of maximizing income from operations, if costs are falling?

Between FIFO and LIFO, which method is preferable in terms of minimizing income taxes, if costs are falling?

Answer 1

Correct Answer:

Income statement	Units	FIFO	LIFO	Weighted Average
Sales Revenue	3500	262500	262500	262500
Cost of goods sold	1000	$            93,500	$            96,500	$        94,500
Gross profit		$        1,69,000	$        1,66,000	$     1,68,000
Operating expenses		94000	94000	94000
Income from operations		$            75,000	$            72,000	$        74,000
Income tax expense		22,500.0	21,600.0	22,200.0
Net income		52,500.0	50,400.0	51,800.0

	Units	FIFO	LIFO	Weighted Average
Cost of goods sold equation:
Beginning inventory	1500	$            37,500	$            37,500	$        37,500
Purchases	3000	$            84,000	$            84,000	$        84,000
Goods available for sale	4500	$        1,21,500	$        1,21,500	$     1,21,500
Ending inventory	1000	$            28,000	$            25,000	$        27,000
Cost of goods sold	3500	$            93,500	$            96,500	$        94,500

Requirement

A	FIFO
B	LIFO
C	LIFO
D	FIFO

End of answer.

Please give a thumbs-up, it will be highly appreciated.

Thanks.