Story Companys inventory records for the month of November reveal the following: Inventory, November 1 300 units
Question:
Inventory, November 1 300 units @ $27.00
November 4, purchase 375 units @ $26.50
November 7, sale 450 units @ $63.00
November 13, purchase 330 units @ $26.00
November 18, purchase 225 units @ $25.40
November 22, sale 570 units @ $63.75
November 24, purchase 300 units @ $25.00
November 28, sale 165 units @ $64.50
Selling and administrative expenses for the month were $16,200. Depreciation expense was $6,000. Story’s tax rate is 35%.
Required
1. Calculate the cost of goods sold and ending inventory under each of the following three methods assuming a periodic inventory system:
(a) FIFO,
(b) LIFO, and
(c) Weighted average.
2. Calculate the gross profit and net income under each costing assumption.
3. Under which costing method will Story pay the least taxes? Explain your answer.
Ending Inventory
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula Ending Inventory Formula =...
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Related Book For
Using Financial Accounting Information The Alternative to Debits and Credits
ISBN: 978-1133161646
7th Edition
Authors: Gary A. Porter, Curtis L. Norton
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