# Eleni Cabinet Company sold 2,200 cabinets during 2011 at \$160 per cabinet. Its beginning inventory on January 1 was 130

## Question:

Eleni Cabinet Company sold 2,200 cabinets during 2011 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

April …………………………………..         350 cabinets @ \$65

June …………………………………..          700 cabinets @ \$70

August ………………………………..          300 cabinets @ \$66

October ………………………………          400 cabinets @ \$68

November ……………………………          250 cabinets @ \$72

The company’s selling and administrative expenses for the year were \$101,000. Eleni uses the periodic inventory system.

REQUIRED

1. Prepare a schedule to compute the cost of goods available for sale. (Round average cost per unit to two decimal places. Round amounts for inventory and cost of goods sold to the nearest whole dollar amount.)

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 days’ inventory on hand under each of the inventory cost flow assumptions in requirement 2. What conclusion can you draw from this comparison? (Round ratios to one decimal place.)

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Related Book For

## Financial Accounting

ISBN: 978-0538476010

11th edition

Authors: Belverd E. Needles, Marian Powers

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