Question

Aberdeen Company sold 2,200 cabinets during 2014 at $160 per cabinet. Its beginning inventory on January 1 was 130 cabinets at $56. Purchases made during the year were as follows.
February ......... 225 cabinets @ $62.00
April ........... 350 cabinets @ $65.00
June ............ 700 cabinets @ $70.00
August .......... 300 cabinets @ $66.00
October ......... 400 cabinets @ $68.00
November ........ 250 cabinets @ $72.00
The company’s selling and administrative expenses for the year were $101,000. The company uses the periodic inventory system.

Required
1. Prepare a schedule to compute the cost of goods available for sale.
2. Compute income before income taxes under each of the following inventory cost flow assumptions:
(a) The average-cost method,
(b) The FIFO method,
(c) The LIFO method. (Round unit cost to the nearest cent, and total costs to the nearest dollar.)
3. Compute inventory turnover and days’ inventory on hand under each of the inventory cost flow assumptions in requirement 2. (Round to one decimal place.) What conclusion can you draw from this comparison?



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  • CreatedMarch 26, 2014
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