Armed Forces Surplus began March 2016 with 80 tents that cost $15 each. During the month, Armed
Question:
Armed Forces Surplus began March 2016 with 80 tents that cost $15 each. During the month, Armed Forces Surplus made the following purchases at cost:
March | 6 | 100 tents @ $20 = $2,000 |
---|---|---|
8 | 120 tents @ $25 = $3,000 | |
26 | 50 tents @ $30 = $1,500 |
Armed Forces Surplus sold 296 tents, and at March 3, the ending inventory consists of 54 tents. The sale price of each tent was $45.
1. Determine the cost of goods sold and ending inventory amounts for March under the average cost, FIFO cost, and LIFO cost. Round average cost per unit two decimal places, and round all other amounts to the nearest dollar.
2. Explain why cost of goods sold is highest under LIFO. Be specific.
3. Prepare the Armed Forces Surplus income statement for March. Report gross profit. Operating expenses totaled $5,000. Armed Forces Surplus uses average costing for inventory. The income tax rate is 35%.
Financial Accounting
ISBN: 978-0134725987
12th edition
Authors: C. William Thomas, Wendy M. Tietz, Walter T. Harrison Jr.