value 0.57 points E7-8 Evaluating the Effects of Inventory Methods on Income fro
ID: 2398054 • Letter: V
Question
value 0.57 points E7-8 Evaluating the Effects of Inventory Methods on Income from Operations, Income Tax Courtney Company uses a periodic inventory system. The following data were available: beginning inventory, 3,000 units at $30; purchases, 4.500 units at $35: operating expenses (excluding income taxes) average income tax rate, 30%. Required: 1. Prepare income statements under the FIFO, LIFO, and weighted average costing methods. (Do not round intermediate calculations. Round your final answers to the nearest dollar amount.) Inventory Costing Method FIFO LIFOWeighted Income Statement 5,750 5,750 Sales Revenue Gross Profit enses Income from Operations Income Tax Expense Net IncomeExplanation / Answer
Inventory Costing Method
Income Statement
Units
FIFO
LIFO
Weighted Average
Sales Revenue
5750
$ 345,000.00
$ 345,000.00
$ 345,000.00
Cost of Goods Sold
5750
$ 186,250.00
$ 195,000.00
$ 189,750.00
Gross Profit
$ 158,750.00
$ 150,000.00
$ 155,250.00
Operating Expenses
$ 101,500.00
$ 101,500.00
$ 101,500.00
Income From Operations
$ 57,250.00
$ 48,500.00
$ 53,750.00
Income tax Expenses
$ 17,175.00
$ 14,550.00
$ 16,125.00
Net Income
$ 40,075.00
$ 33,950.00
$ 37,625.00
Cost of Goods Sold Schedule
Units
FIFO
LIFO
Weighted Average
Beginning Inventory
3000
$ 90,000.00
$ 90,000.00
$ 90,000.00
Purchases
4500
$ 157,500.00
$ 157,500.00
$ 157,500.00
Goods Available for sale
7500
$ 247,500.00
$ 247,500.00
$ 247,500.00
Ending Inventory
1750
$ 61,250.00
$ 52,500.00
$ 57,750.00
Cost of Goods Sold
5750
$ 186,250.00
$ 195,000.00
$ 189,750.00
FIFO
LIFO
Weighted Average
Ending Inventory Valuation
(1750*35)
$ 61,250.00
(1750*30)
$ 52,500.00
((90000+157500)/7500)*1750
$ 57,750.00
FIFO method should be accepted for maximizing income from operations.
Inventory Costing Method
Income Statement
Units
FIFO
LIFO
Weighted Average
Sales Revenue
5750
$ 345,000.00
$ 345,000.00
$ 345,000.00
Cost of Goods Sold
5750
$ 186,250.00
$ 195,000.00
$ 189,750.00
Gross Profit
$ 158,750.00
$ 150,000.00
$ 155,250.00
Operating Expenses
$ 101,500.00
$ 101,500.00
$ 101,500.00
Income From Operations
$ 57,250.00
$ 48,500.00
$ 53,750.00
Income tax Expenses
$ 17,175.00
$ 14,550.00
$ 16,125.00
Net Income
$ 40,075.00
$ 33,950.00
$ 37,625.00
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