Question: Daniel Company uses a periodic inventory system Data for 2015

Daniel Company uses a periodic inventory system. Data for 2015: beginning merchandise inventory (December 31, 2014), 2,000 units at $38; purchases, 8,000 units at $40; expenses (excluding income taxes), $194,500; ending inventory per physical count at December 31, 2015, 1,800 units; sales, 8,200 units; sales price per unit, $75; and average income tax rate, 30 percent.

1. Compute cost of goods sold and prepare income statements under the FIFO, LIFO, and average cost inventory costing methods. Use a format similar to the following:

2. Between FIFO and LIFO, which method is preferable in terms of ( a ) net income and ( b ) income taxes paid (cash flow)? Explain.
3. What would your answer to requirement (2) be, assuming that prices were falling?Explain.
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  • CreatedJuly 01, 2014
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