Spice Inc. began October 2014 with 100 shirts that cost $76 each. During October, the store made the following purchases at cost:

Spice sold 500 shirts (320 shirts on October 18 and 180 shirts on October 28) and ended October with 130 shirts. The sale price of each shirt was $130.
Requirements
1. Determine the cost of goods sold and ending inventory amounts by the weighted-average cost and FIFO cost methods assuming the perpetual system is used. Round weighted-average cost per unit to three decimal places, and round all other amounts to the nearest dollar.
2. Explain why cost of goods sold is highest under weighted-average cost. Be specific.
3. Prepare Spice's income statement for October 2014. Report gross profit. Operating expenses totalled $10,000. Spice uses the weighted-average-cost method for inventory. The income tax rate is 23%.

Transcribed Image Text:

200$81 $16,200 90@82 7,380 240 8520,400 Oct. 3 12 24