Question

E7-7 Analyzing and Interpreting the Financial Statement Effects of FIFO, LIFO, and Weighted Average Cost [LO 7-3) 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 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 Cost 1,500 $24 Transactions a. Inventory. Beginning For the years b. Purchase, March 5 c. Purchase, September 19 d. Sale, April 15 (Hold for $69 per unit) e. Sale, October 31 (old for $72 per unit) f. Operating expenses (excluding income tax expense). S406,000 7.500 3,500 2,400 6,500 27 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 weighted average method. 6. Which inventory costing method minimizes Income taxes? Complete this question by entering your answers in the tabs below. Required Required Required Required Required Calculate the number and cost of goods available for sale. units Number of Goods Available for Sale Cost of Goods Available for Sale RES Required 2 >

Answer 1

FIFO No of goods available for sale Cost of Goods Sold $ 3,200.00 $ 231,600.00 Date Detail 1-Jan Beginning Inventory 5-Mar Purchase 19-Mar Purchase 15-Apr Sales 31-Oct Sales Balance Balance Units Cost/Unit 1500 $ 24.00 7500 $ 25.00 3500 $ 27.00 -2400 $ 69.00 -6900$ 72.00 3200 $ 27.00 T.Cost $ 36,000.00 $ 187,500.00 $ 94,500.00 $(165,600.00) $(496,800.00) $ 86,400.00 First Sale IS $ Cost of Goods Sold 1,500.00 $ 24.00 $ 36,000.00 900.00 $ 25.00 $ 22,500.00 2,400.00 $ 58,500.00 6,600.00 $ 25.00 $ 165,000.00 300.00 $ 27.00 $ 8,100.00 6,900.00 $ 173,100.00 Total Second Sale Total 2.400 $ $ $

қ LIFO Ending Inventory Cost of Goods Sold $ 3,200.00 $ 239,500.00 Date Detail 1-Jan Beginning Inventory 5-Mar Purchase 19-Mar Purchase 15-Apr Sales 31-Oct Sales Balance Balance Units Cost/Unit T. Cost 1500 $ 24.00 $ 36,000.00 7500 $ 25.00 $ 187,500.00 3500 $ 27.00 $ 94,500.00 -2400 $ 69.00 $(165,600.00) -6900 $ 72.00 $(496,800.00) 1700 $ 25.00 $ 42,500.00 1500 $ 24.00 $ 36,000.00 First Sale Total Second Sale Total $ $ $ $ $ Cost of Goods Sold 2,400.00 $ 27.00 $ 64,800.00 2,400.00 $ 64,800.00 1,100.00 $ 27.00 $ 29,700.00 5,800.00 $ 25.00 $ 145,000.00 6,900.00 $ 174,700.00

Weighted Average Method Ending Inventory Cost of Goods Sold $ 3,200.00 $ 236,592.00 Date Detail 1-Jan Beginning Inventory 5-Mar Purchase 19-Mar Purchase Balance 15-Apr Sales 31-Oct Sales Balance Units Cost/Unit T. Cost 1500 $ 24.00 $ 36,000.00 7500 $ 25.00 $ 187,500.00 3500 $ 27.00 $ 94,500.00 12500 $ 25.44 $ 318,000.00 -2400 $ 69.00 $(165,600.00) -6900$ 72.00 $(496,800.00) 3200 $ 25.44 $ 81,408.00 First Sale Total Second Total $ $ $ $ Cost of Goods Sold 2,400.00 $ 25.44 $ 61,056.00 2,400.00 $ 61,056.00 6,900.00 $ 25.44 $ 175,536.00 6,900.00 $ 175,536.00