Question

Please type your answer, not hand writing.

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. Unit Units 3,000 Cost $ 8 Transactions a. Inventory, Beginning For the year: b. Purchase, March 5 C. Purchase, September 19 d. Sale, April 15 (sold for $29 per unit) e. Sale, October 31 (sold for $31 per unit) f. Operating expenses (excluding income tax expense), $250,eee 11 9,5ee9 5,00 4.ee B.288 Required: 1. Calculate the number and cost of goods available for sale. 2. Calculate the number of units in ending Inventory. 3. Compute the cost of ending Inventory and cost of goods sold under (a) FIFO. (b) LIFO, and (c) weighted average cost. 4. Prepare an Income statement that shows the FIFO method, LIFO method and welghted average method. 6. Which Inventory costing method minimizes Income taxes? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 6 Calculate the number and cost of goods available for sale. units Number of Goods Available for Sale Cost of Goods Available for Sale Required 1 Required 2 >

Answer 1

1.

Date	Unit	Unit cost	Amount
Beginning inventory	3000	$8	$24,000
March 5	9500	9	85,500
Sep.19	5000	11	55,000
Cost of goods available for sale	17500		$164,500

Average cost per unit = $164,500 / 17,500 = $9.4

Number of goods available for sale = 17,500 units

Cost of goods available for sale = $164,500

2.

Number of units in ending inventory = 17,500 - 12,000 (4,000+8,000) = 5,500 units

3.

	Cost of ending inventory	Cost of goods sold
FIFO	$59,500 ($55,000+500*$9)	$105,000 ($164,500-59,500)
LIFO	46,500 (24,000+2500*$9)	118,000 (164,500-46,500)
Weighted average	51,700 (5500*$9.4)	112,800 (12,000*$9.4)

4.

SCORESBY INC. Income Statement For The Year Ended December 31
	FIFO	LIFO	Weighted average
Sales (4,000*29+8,000*31)	$364,000	$364,000	$364,000
Cost of goods sold	105,000	118,000	112,800
Gross margin	259,000	246,000	251,200
Operating expenses	250,000	250,000	250,000
Income (loss) from operations	$9,000	$(4,000)	$1,200

5.

LIFO method minimizes income tax.