PROBLEM $8\mathrm{.}1$B Four Methods of Inventory Valuation LO$8-2$

On January $22,2024,$ Dobbins Supply, Inc., sold $700$ toner cartridges to Foster Office Fitters. Immediately prior to this sale, Dobbins Supply$$s perpetual inventory records for these units included the following cost layers:

Table Summary: Row $1$ is a header. Row $4$ contains no data in column $3.$

Purchase Date Quantity Unit Cost Total Cost

Dec. $12,2023400$ $$20$ $$8,000$

Jan. $16,20241,2002226,400$

Total on hand $1,600$ $$34,400$

Instructions

Note: We present this problem in the normal sequence of the accounting cycle$$that is$,$ journal entries before ledger entries. However, you may find it helpful to work part b first.

Prepare a separate journal entry to record the cost of goods sold relating to the January $22$ sale of $700$ toner cartridges, assuming that Dobbins Supply uses the following:

Specific identification $(300$ of the units sold had been purchased on December $12,$ and the remaining $400$ had been purchased on January $16)$

Average cost

FIFO

LIFO

Complete a subsidiary ledger record for the toner cartridges using each of the four inventory valuation methods listed. Your inventory records should show both purchases of this product, the sale on January $22,$ and the balance on hand at December $12,$ January $16,$ and January $22.$ Use the formats for inventory subsidiary records illustrated in Exhibits $83$ through $85$ of this chapter.

Refer to the cost of goods sold figures computed in part a$.$ For financial reporting purposes, can Dobbins Supply, Inc., use the valuation method that resulted in the highest cost of goods sold if$,$ for tax purposes, it used the method that resulted in the lowest cost of goods sold? Explain.