# Question: McRay Company merchandises a single product called Bright The following

McRay Company merchandises a single product called Bright. The following data pertain to the beginning inventory and purchases of Bright during the past year:
January 1 inventory ........ 34,000 units @ \$11.00
February purchases ........ 40,000 units @ \$12.00
March purchases ......... 80,000 units @ \$12.40
May purchases ........... 60,000 units @ \$12.60
July purchases ........... 100,000 units @ \$12.80
September purchases ....... 80,000 units @ \$12.60
November purchases ....... 30,000 units @ \$13.00
Sales of Bright totaled 393,000 units at \$20.00 per unit. Selling and administrative expenses totaled \$2,551,000 for the year. McRay 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.
3. Compute inventory turnover and daysâ€™ inventory on hand under each of the inventory cost flow assumptions listed in requirement 2. What conclusion can you draw?

View Solution:

Sales5
Views233