Question

Homework: Chapter 6 Homework HW SO core: 0 of 50 pts < 6 of 6 5 complete P6A-32A (similar to) 25th Century Electronic Center began October with 65 units of merchandise inventory that cost $82 each. During October, the wore made the following purchases Click the icon to view the purchases.) 25th Century uses the periodic inventory system, and the physical count at October 31 indicates that 80 units of merchandise inventory are on hand. Read the requirements Requirement 1. Determine the ending merchandise inventory and cost of goods sold amounts for the October financial statements using the FIFO, LIFO, and weighted average inventory costing methods. FIFO Ending inventory Cost of goods sold Enter any number in the edit fields and then click Check Answer 5 Part remaining Clear All

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Answer 1

1	Number of units sold=beginning units+units purchased-Ending units=65+(25+30+35)-80=75 units
	FIFO:
	Under FIFO method goods purchased first are sold first
	Cost of goods sold:
	75 units sold as follows;
					$
	From beg.inventory		65 units at $ 82		5330
	From Oct 3. purchase		10 units at $ 90		900
	Total		75 units		6230
	Ending inventory;
					$
	From Oct 3. purchase		15 units at $ 90		1350
			(25-10)
	From Oct 12. purchase		30 units at $ 90		2700
	From Oct 18. purchase		35 units at $ 90		3150
	Total		80 units		7200
	LIFO:
	Under LIFO method goods purchased last are sold first
	Cost of goods sold:
	75 units sold as follows;
					$
	From Oct 18. purchase		35 units at $ 96		3360
	From Oct 12. purchase		30 units at $ 90		2700
	From Oct 3. purchase		10 units at $ 90		900
	Total		75 units		6960
	Ending inventory;
					$
	From beg.inventory		65 units at $ 82		5330
	From Oct 3. purchase		15 units at $ 90		1350
			(25-10)
	Total		80 units		6680
	Weighted-average:
				Units	Rate	cost
	From beg. Inventory			65	82	5330
	Oct 3.			25	90	2250
	Oct 12.			30	90	2700
	Oct 18.			35	96	3360
				155		13640
	Weighted-average cost per unit=13640/155=$ 88 per unit
	Cost of goods sold=Units sold*Weighted average cost per unit=75*88=$ 6600
	Ending inventory=Ending inventory in units*Weighted average cost per unit=80*88=$ 7040
2	Gross profit:
				FIFO	LIFO	Weighted average
	Sales revenue			23000	23000	23000
	Less; Cost of goods sold			6230	6960	6600
	Gross profit			16770	16040	16400
3	LIFO method will result in lowest income taxes
	because LIFO has lowest gross profit.
	This will result in lowest net income and this will result in lowest income taxes
	FIFO method will result in highest income taxes
	because FIFO has highest gross profit.
	This will result in highest net income and this will result in highest income taxes