Smithson Corporation uses a periodic inventory system. The following information related to its merchandise inventory during...

Transcribed Image Text:

Smithson Corporation uses a periodic inventory system. The following information related to its merchandise inventory during the month of August 2018 is available: Aug. 1 Aug. 8 Aug. 14 Inventory on hand-3,900 units; cost $7.18 each. Purchased 11,500 units for $5.71 each. Sold 8,400 units for $12.07 each. Purchased 7,400 units for $5.67 each. Sold 10,900 units for $10.01 each. Aug. 18 Aug. 25 Required: Determine the ending inventory balance Smithson would report in its August 31, 2018, balance sheet, the cost of goods sold, and gross profit percentage it would report in its August 2018 income statement using each of the following cost flow methods: 1. First-in, first-out (FIFO) 2. Last-in, first-out (LIFO) 3. Average cost You are also required to show the comparison of different methods. Please report which method has highest gross profit and why? Smithson Corporation uses a periodic inventory system. The following information related to its merchandise inventory during the month of August 2018 is available: Aug. 1 Aug. 8 Aug. 14 Inventory on hand-3,900 units; cost $7.18 each. Purchased 11,500 units for $5.71 each. Sold 8,400 units for $12.07 each. Purchased 7,400 units for $5.67 each. Sold 10,900 units for $10.01 each. Aug. 18 Aug. 25 Required: Determine the ending inventory balance Smithson would report in its August 31, 2018, balance sheet, the cost of goods sold, and gross profit percentage it would report in its August 2018 income statement using each of the following cost flow methods: 1. First-in, first-out (FIFO) 2. Last-in, first-out (LIFO) 3. Average cost You are also required to show the comparison of different methods. Please report which method has highest gross profit and why?

Answer rating: 100% (QA)

Date Aug 1 Aug 8 Aug 18 Total Units Available Less Units Sold Aug 14 Aug 25 Units at Ending FIFO Dat... View the full answer