Mojo Industries tracks the number of units purchased and sold throughout each ac
ID: 2594910 • Letter: M
Question
Mojo Industries tracks the number of units purchased and sold throughout each accounting period but applies its inventory costing method at the end of each period, as if it uses a periodic inventory system. Assume its accounting records provided the following information at the end of the accounting period, January 31. The inventory’s selling price is $13 per unit.
Assuming that for Specific identification method (item 1d) the January 10 sale was from the beginning inventory and the January 17 sale was from the January 12 purchase.
Compute the amount of goods available for sale, ending inventory, and cost of goods sold at January 31 under each of the following inventory costing methods: (Round your intermediate calculations to 2 decimal places and final answers to the nearest dollar amount.)
Of the four methods, which will result in the highest gross profit?
Of the four methods, which will result in the lowest income taxes?
Mojo Industries tracks the number of units purchased and sold throughout each accounting period but applies its inventory costing method at the end of each period, as if it uses a periodic inventory system. Assume its accounting records provided the following information at the end of the accounting period, January 31. The inventory’s selling price is $13 per unit.
C Chegg Study Guided SFinal Exam xM Final Exam G Mojo Industries tracks t - ezto.mheducation.com/hm.tpx Assuming that for Specific identification method (item 1d) the January 10 sale was from the beginning inventory and the January 17 sale was from the January 12 purchase. Required 1. Compute the amount of goods available for sale, ending inventory, and cost of goods sold at January 31 under each of the following inventory costing methods: (Round your intermediate calculations to 2 decimal places and final answers to the nearest dollar amount.) unt of Goods Ending Inventory Cost of Goods Sold Available for Sale Ending Inventory a. Weighted average cost b. First-in, first-out C. Last-in, first-out d. Specific identification 2-a. Of the four methods, which will result in the highest gross profit? O Weighted average cost First-in, first-out O Last-in, first-out +1 4:02Explanation / Answer
Computation of ending inventory in units: Beginning balance 310 Add:purchases Jan. 12 360 Jan. 26 80 440 Goods available for sale 750 Less:Sales Jan 10. 260 Jan 17. 100 360 Ending balance 390 Amount of goods available for sale are same for all methods Units Cost Beginning balance 310 1395 Add:purchases Jan. 12 360 1800 Jan. 26 80 480 Goods available for sale 750 3675 1 Weighted average cost: Weighted average cost per unit=Amount of goods available for sale/Goods available for sale in units=3675/750=4.9 Value of ending inventory=390*4.9=$1911 Cost of goods sold=360*4.9=$1764 First-in, first-out (FIFO): Goods purchased first are sold first Ending inventory consists of goods purchased last Value of ending inventory=(80*6)+(310*5)=$2030 Sold units consists of goods purchased first Cost of goods sold=(310*4.5)+(50*5)=$1645 Last-in, first-out (LIFO): Goods purchased last are sold first Ending inventory consists of goods purchased first Value of ending inventory=(80*5)+(310*4.5)=$1795 Sold units consists of goods purchased last Cost of goods sold=(280*5)+(80*6)=$1880 Specific identification: Cost of goods sold=(260*4.5)+(100*5)=$1670 Value of ending inventory=(360-100)*5+(310-260)*4.5+(80*6)=$2005 2-a. Highest gross profit is due to low cost of goods sold or high inventory costs Among the 4 above FIFO has the lower cost of goods sold and higher inventory cost 2-b. Lower income taxes means lower net income lower net income is due to high cost of goods sold or low inventory costs Among the 4 above LIFO has the higher cost of goods sold and lower inventory cost.
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