Question: Scoresby Inc uses a perpetual inventory system At December 31

Scoresby Inc. uses a perpetual inventory system. At December 31, 2015, the company’s accounting records provided the following information for Product B:
1. Prepare a statement of earnings for 2015 through pretax earnings, showing the detailed computation of cost of sales for two cases:
a. Case A— FIFO
b. Case B—Weighted average For each case, show the computation of the ending inventory.
2. Compare the two cases with regard to the pretax earnings and the ending inventory amounts. Explain the similarities and differences.
3. Which inventory costing method may be preferred for income tax purposes? Explain.
4. Prepare journal entries to record transactions (b) through (e), assuming that Scoresby uses FIFO for inventory costing.

Sale on SolutionInn
  • CreatedAugust 04, 2015
  • Files Included
Post your question