Window Help etext pearson.com Problems Group A PEARSON 365 toryEnd of Chapter In

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Window Help etext pearson.com Problems Group A PEARSON 365 toryEnd of Chapter Inventory P6A-32A Accounting for inventory using the periodic inventory system-FIFO, LIFO, and weighted-average, and comparing FIFO, LIFO, and weighted-average Futuristic Electronic Center began October with 65 units of merchandise inventory that cost $82 each. During October, the store made the following purchases: Oct. 3 25 units$ 90 each 12 ?0 units @ $ 90 each 18 35 units$96 each Futuristic uses the periodic inventory system, and the physical count at October 31 indicates that 80 units of merchandise inventory are on hand. Requirements 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. LIFO Ending Merch. Inu., $6,680 2. Net sales revenue for October totaled $28,000. Compute Futuristic's gross profit for October using each method. 3. Which method will result in the lowest income taxes for Futuristic? Why? Which method will result in the highest net income for Futuristic? Why? 3

Explanation / Answer

STATEMENT SHOWING INVENTORY RECORD UNDER PERIODIC FIFO METHOD RECIEPTS COST OF GOODS SOLD BALANCE DATE UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ 1-Oct 65 62 4030 65 62 4030 Purchasse 3-Oct 25 90 2250 10 90 900 15 90 1350 12-Oct 30 90 2700 30 90 2700 18-Oct 35 96 3360 35 96 3360 TOTAL 155 12340 75 4930 80 7410 STATEMENT SHOWING INVENTORY RECORD UNDER PERIODIC LIFO METHOD RECIEPTS COST OF GOODS SOLD BALANCE DATE UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ 1-Oct 65 62 4030 65 62 4030 Purchasse 3-Oct 25 90 2250 10 90 900 15 90 1350 12-Oct 30 90 2700 30 90 2700 18-Oct 35 96 3360 35 96 3360 TOTAL 155 12340 75 6960 80 5380 STATEMENT SHOWING INVENTORY RECORD UNDER PERIODIC WEIGHTED AVERAGE METHOD RECIEPTS COST OF GOODS SOLD BALANCE DATE UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ 1-Oct 65 62 4030 Purchasse 3-Oct 25 90 2250 12-Oct 30 90 2700 18-Oct 35 96 3360 TOTAL 155 79.61 12340 75 79.61 5971 80 79.61 6369 Req 2: GROSS PROFIT FIFO LIFO AVERAGE sales revenue 28,000 28000 28000 Less: Cost of Goods sold 4,930 6960 5,971 Gross Profit 23,070 21,040 22,029 Req 3: LIFO gives Lloest income tax. FIFO results in highest income

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