On January 22, 2015, Dobbins Supply, Inc., sold 700 toner cartridges to Foster Office Fitters. Immediately prior

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On January 22, 2015, Dobbins Supply, Inc., sold 700 toner cartridges to Foster Office Fitters. Immediately prior to this sale, Dobbins Supply's perpetual inventory records for these units included the following cost layers:
On January 22, 2015, Dobbins Supply, Inc., sold 700 toner

Instructions
a. Prepare a separate journal entry to record the cost of goods sold relating to the January 22 sale of 700 toner cartridges, assuming that Dobbins supply uses:
1. Specific identification (300 of the units sold had been purchased on December 12, and the remaining 400 had been purchased on January 16).
2. Average cost.
3. FIFO.
4. LIFO.
b. Complete a subsidiary ledger record for the toner cartridges using each of the four inventory valuation methods listed above. Your inventory records should show both purchases of this product, the sale on January 22, and the balance on hand at December 12, January 16, and January 22. Use the formats for inventory subsidiary records illustrated on pages 345-347 of this chapter.
c. Refer to the cost of goods sold figures computed in part a. For financial reporting purposes, can Dobbins Supply, Inc. use the valuation method that resulted in the highest cost of goods sold if, for tax purposes, it used the method that resulted in the lowest cost of goods sold? Explain.

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Financial and Managerial Accounting the basis for business decisions

ISBN: 978-0078025778

17th edition

Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello

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