Question

Right Now Electronic Center began Dec with 90 units of merchandise inventory that cost $74 each. During Dec, the store made the following purchases:

Dec 3: 20 units @ $76 each

Dec 12: 30 units @ $78 each

Dec 18: 60 units @ $94 each

Right Now uses the periodic inventory system, and the physical count at Dec 31 indicates that 80 units of inventory are on hand.

1a. Determine the ending merchandise inventory and cost of goods sold amounts for the Dec financial statements using FIFO, LIFO, and weighted average inventory costing methods.

1b. Sales revenue for Dec totaled $25000. Compute Jepson's gross profit for July using each method.

1c. Which method will result in the lowest income taxes for RightNow? Why and what is the company's gross profit under that method?
1d. Which method will result in the highest income taxes for RightNow? Why and what is the company's gross profit under that method?

Answer 1

FIFO Cost of goods Sold = $ 8960 Ending Inventory = $ 7200 Working: COGS = 90 times $ 74 + 20 times $ 76 + 10 times $ 78 = $ 8960 Ending inventory = 20 times $ 78 + 60 times $ 94 = $ 7200 LIFO cost of goods sold = $ 10240 Ending inventory = $ 5920 Working: COGS = 60 times 94 + 30 times $ 78 + 20 times $ 76 + 10 times 74 = $ 10240 Ending Inventory = 80 times 74 = $ 5920 Weighted Average Cost of goods sold = $ 9696 Ending Inventory = $ 6464 Working: COGS = 120 times $ 80.80 = $ 9696 Ending Inventory = 80 times $ 80.80 = $ 6484 \r\n LIFO method will result in the lowest income takes due to lowest gross profit gross profit = $ 14760 FIFO method will result in highest income that due to highest gross profit Gross profit = $ 16040

Answer 2

this is very hard to read. i can barely read the numbers you put and if i am reading it correctly idk how you got some of the numbers.