unting for inventory using the periodic inventory system- 2A pA3FI, LIFO, and we

Question

unting for inventory using the periodic inventory system- 2A pA3FI, LIFO, and weighted-average, and comparing FIFO, LIFO, Lo and weighted-average stic Electron Electronic Center began October with 65 units of merchandise inventory 82 each. During October, the store made the following purchases: Oct. 3 12 18 25 units@$ 90 each 30 units@ $ 90 each 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. for October using each method. method will result in the highest net income for Futuristic? Why? 2. Net sales revenue for October totaled $28,000. Compute Futuristic's gross profit 3. Which method will result in the lowest income taxes for Futuristic? Why? Which

Explanation / Answer

1) total amount units per unit 1-Oct 65 82 5330 3-Oct 25 90 2250 12-Oct 30 90 2700 18-Oct 35 96 3360 total 155 13640 units sold = 155-80 75 FIFO cost of goods sold 1-Oct 65 82 5330 3-Oct 10 90 900 75 6230 ending inventory 3-Oct 15 90 1350 12-Oct 30 90 2700 18-Oct 35 96 3360 total 80 7410 LIFO cost of goods sold 3-Oct 10 90 900 12-Oct 30 90 2700 18-Oct 35 96 3360 total 75 6960 ending inventory 1-Oct 65 82 5330 3-Oct 15 90 1350 80 6680 Weighted average inventory cost of goods sold = 13640/155*75 6600 Ending inventory          = 13640/155*80 7040 Weighted 2) FIFO LIFO average sales 28,000 28,000 28,000 less cost of goods sold 6230 6960 6600 Gross profit 21,770 21,040 21,400 3) LIFO will result in lowest income taxes as its gross profit is the lowest or has the highesst cost of goods sold FIFO will have the highest net income as its cost of goods sold is the lowest

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