At the end of January 2014, the records of Donner Company showed the following f
ID: 2460032 • Letter: A
Question
At the end of January 2014, the records of Donner Company showed the following for a particular item that sold at $18.40 per unit:
Prepare a partial income statement under each method of inventory: (a) average cost, (b) FIFO, (c) LIFO, and (d) specific identification. For specific identification, assume that the first sale was selected from the beginning inventory and the second sale was selected from the January 12 purchase
At the end of January 2014, the records of Donner Company showed the following for a particular item that sold at $18.40 per unit:
Transactions Units Amounts Inventory January 1st 630 2,835 Inventory January 12th 600 3,900 Inventory January 26th 160 1,360 Sale (490) Sale (200) 1b.Prepare a partial income statement under each method of inventory: (a) average cost, (b) FIFO, (c) LIFO, and (d) specific identification. For specific identification, assume that the first sale was selected from the beginning inventory and the second sale was selected from the January 12 purchase
Explanation / Answer
Answer a. FIFO Closing Inventory - Jan 31, 2014 Date Units Cost per Unit Total Cost Beg. Inv. Jan-01 630 4.50 2,835 Purchases Jan-12 70 6.50 455 Total 700 3,290 Cost Of Goods Sold = Total Cost - Closing inventory Cost Of Goods Sold = 8095 - 3290 = $4805 Partial Income Statement Sales - 690 Units X $18.40 12696 Less: Cost of Goods Sold -4805 Gross Profit 7891 Answer b. LIFO Closing Inventory - Jan 31, 2014 Date Units Cost per Unit Total Cost Purchases Jan-26 160 8.50 1,360 Purchases Jan-12 540 6.50 3,510 Total 700 4,870 Cost Of Goods Sold = 8095 - 4870 = $3225 Partial Income Statement Sales - 690 Units X $18.40 12696 Less: Cost of Goods Sold -4870 Gross Profit 7826 Answer c. Specific Identification Closing Inventory - Jan 31, 2014 Date Units Cost per Unit Total Cost Beg. Inventory Jan-1 140 4.50 630.00 Purchases Jan-12 400 6.50 2,600 Purchases Jan-26 160 8.50 1,360 Total 700 4,590 Cost of Goods Sold Date Units Cost per Unit Total Cost Sale 1 490 4.50 1,360 Sales 2 200 6.50 1,300 Total 690 2,660 Partial Income Statement Sales - 690 Units X $18.40 12696 Less: Cost of Goods Sold -2660 Gross Profit 10036
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