Craig Company buys and sells one product. Its beginning inventory, purchases, and sales during the current year
Question:
Craig Company buys and sells one product. Its beginning inventory, purchases, and sales during the current year follow.
Additional tracking data for specific identification:
Sold 400 units costing $14 each, 200 units costing $15 each, and 100 units costing $20 each.
Required
1. Compute the cost of goods available for sale.
2. Apply FIFO, LIFO, weighted average, and specific identification to compute ending inventory and cost of goods sold under each method using the perpetual system.
3. Compute gross profit under each method. Also, report the inventory amount reported on the balance sheet for each method.
4. In preparing financial statements for the current year, the financial officer was instructed to use FIFO but failed to do so and instead computed cost of goods sold according to LIFO, which led to a $1,400 overstatement in cost of goods sold from using LIFO. Determine the impact on current year income from the error. Also determine the effect of this error on next year’s income.
Step by Step Answer:
1 Cost of goods available for sale this amount is the same for all methods ...View the full answer
