Question

Using the perpetual inventory system of the moving average method, the LIFO method, and FIFO method, Zoola, Inc. provided the following information regarding its inventory for the current year, its second year of operations. beginning inventory 3,000 units at $17.00 unit cost, Purchases, January 23, 4,500 units 16.00 unit cost, Purchases February 14, 1,200 units 16.50 unit cost, Purchases, March 17, 2,300 units, 17.00 unit cost, Units Sold-April 13 at $20 9,600 units, Purchases, May 5, 5,600 units 15.00 unit cost, Purchases July 4, 3,200 units 16.00 unit cost, Units Sold-October 31 at $19 8,700 units, Purchases, November 22, 1,400 units 15.00 unit cost. Prepare a partial income statement and balance sheet for Zoola, Inc. under each of the inventory valuation methods. Begain by selecting the labels and enter the amounts to complete the partial income statements under each cost-flow assumption.

Answer 1

Income statement of Zoola Inc. under moving average method of valuing inventory

                                 Particulars                                                         Amount in ($)

Sales [(9,600 * 20$) + (8,700 * $19)]                                              357,300

Less : Cost of Goods Sold

      [9600 * 16.3625]                                  158,993

         [8,700 +15.83929)                                                               137,802

         Gross Profit                                                                       60,505

Income statement of Zoola Inc. under moving LIFO method of valuing inventory

                          Particulars                                               Amount in ($)

Sales [(9,600 * 20$) + (8,700 * $19)]                                              357,300

Less : Cost of Goods Sold

          [(2300 * 17)+(1200 * 16.5)+(4500 * 16)+(1600 * 17)]              158,100

          [(5,600 * 15)+(3,100 * 16)]                                                  133,600

          Gross Profit                                                                       65,600

Income statement of Zoola Inc. under moving FIFO method of valuing inventory

                        Particulars                                             Amount in ($)

Sales [(9,600 * 20$) + (8,700 * $19)]                                              357,300

Less : Cost of Goods Sold

          [(3000 * 17)+(4500 * 16)+(1200 * 16.5)+(900 * 17)]                158,100

         [(1400 * 17)+(5600 * 15)+(1700 * 16)]                                    135,000

                Gross Profit                                                                  64,200