P7-3 Evaluating Four Alternative Inventory Methods Based on Income and Cash Flow LO7-2, 7-3

[The following information applies to the questions displayed below.]

At the end of January of the current year, the records of Donner Company showed the following for a particular item that sold at $15.80 per unit:

Transactions

Units

Amount

Inventory, January 1

680

$

3,400

Purchase, January 12

650

4,550

Purchase, January 26

210

1,890

Sale

(540)

Sale

(200)

Required:

1a. Compute Cost of Goods Sold under each method of inventory: average cost, FIFO, LIFO, and specific identification. For specific identification, assume that the first sale was selected from the beginning inventory and the second sale was selected from the January 12 purchase. Assume that the company uses periodic inventory system. (Round unit price to 2 decimal places. Input all amounts as positive values.)

Average Cost	Cost of Good Available for Sale			Cost of Goods Sold
	# of Units	Cost per Unit	Cost of Goods Available for Sale	# of Units Sold	Cost per Unit	Cost of Goods Sold
Beginning inventory
Purchases:
January 12
January 26
Total
FIFO	Cost of Goods Available for Sale			Cost of Goods Sold
	# of Units	Cost per Unit	Cost of Goods Available for Sale	# of Units Sold	Cost per Unit	Cost of Goods Sold
Beginning inventory
Purchases:
January 12
January 26
Total
LIFO	Cost of Goods Available for Sale			Cost of Goods Sold
	# of Units	Cost per Unit	Cost of Goods Available for Sale	# of Units Sold	Cost per Unit	Cost of Goods Sold
Beginning inventory
Purchases:
January 12
January 26
Total
Specific Identification	Cost of Goods Available for Sale			Cost of Goods Sold
	# of Units	Cost per Unit	Cost of Goods Available for Sale	# of Units Sold	Cost per Unit	Cost of Goods Sold
Beginning inventory
Purchases:
January 12
January 26
Total

1b. Prepare a partial income statement under each method of inventory: (a) average cost, (b) FIFO, (c) LIFO, and (d) specific identification. For specific identification, assume that the first sale was selected from the beginning inventory and the second sale was selected from the January 12 purchase Assume that the company uses periodic inventory system.

DONNER COMPANY
Partial Income Statement
For the Month Ended January 31, Current Year
	(a)	(b)	(c)	(d)
	Average Cost	FIFO	LIFO	Specific Identification