Question

Required information [The following information applies to the questions displayed below.] Daniel Company uses a periodic inventory system. Data for the current year: beginning merchandise inventory (ending inventory December 31, prior year), 2,130 units at $36; purchases, 7,900 units at $38; expenses (excluding income taxes), $193,900; ending inventory per physical count at December 31, current year, 1,770 units; sales, 8,260 units; sales price per unit, $79; and average income tax rate, 34 percent. Required: 1-a. Compute cost of goods sold under the FIFO, LIFO, and average cost inventory costing methods. 1-b. Prepare income statements under the FIFO, LIFO, and average cost inventory costing methods.

Answer 1

A C D 660 B Requirement 1-a: 662 663 664 665 666 667 COGS opening inventory Purchases Goods available for sale ending inventory COGS Daniel Company Inventory costing method Units FIFO LIFO Average Cost 2130 $ 76,680 $ 76,680 $ 76,680 7900 $ 300,200 $ 300,200 $ 300,200 10030 $ 376,880$ 376,880 $ 376,880 1770 $ 67,260 $ 63,720 $ 66,508.24 8260 $ 309,620 $ 313,160 $ 310,372 668 669 Ending inventory (FIFO ) = 1770 x $38 Ending inventory (LIFO ) = 1770 x $36 Ending Inventory (weighted avg.) = 1770 * 376,880 / 10,030 673 674 675 Requirement 1-b: Income statement Sales ( 8260 x 79) Less:- COGS 677 GP 679 FIFO $ 652,540 $ $ 309,620 $ $ 342,920 $ $ 193,900 $ $ 149,020 $ $ 50,667 $ $ 98,353 $ LIFO Average Cost 652,540 $ 652,540 313,160 $ 310,372 339,380 $ 342,168 193,900 $ 193,900 145,480 $ 148,268 49,463 $ 50,411 96,017 $ 97,857 less :- Operating exp. Income before taxes income tax Net income 681 682 co

A Requirement 1-a: 663 664 665 COGS opening inventory Purchases Goods available for sale ending inventory COGS Daniel Company Inventory costing method FIFO LIFO =2130*36 =2130*36 =7900*38 =7900*38 =+D664+D665 S+E664+E665 =1770*38 =1770*36 =+D666-D667 =+E666-E667 Units 2130 7900 =+C664+C665 1770 =+C666-C667 Average Cost =2130*36 =7900*38 =+F664+F665 66508.24 S+F666-F667 666 667 668 669 670 671 672 Ending inventory (FIFO ) = 1771 Ending inventory (LIFO) = 1770 Ending Inventory (weighted av 673 674 675 | Requirement 1-b: Income statement Sales ( 8260 x 79) Less:- COGS 676 677 678 GP FIFO =8260*79 =+D668 =+C676-C677 193900 =+C678-C679 =+C680*0.34 =+C680-C681 L IFO =8260*79 =+E668 =+D676-D677 193900 =+D678-1679 =+D680*0.34 =+D680-D681 rating eyn. less :- Operating exp. Income before taxes income tax Net income Average Cost =8260*79 =+F668 =+E676-5677 193900 =+E678-E679 =+E680*0.34 =+E680-E681 679 681 682 683