Suppose that David adopted the last-in first-out (LIFO) inventory-flow method for his business inventory of widgets (purchase
Question:
In late December, David sold widget #2 and next year David expects to purchase three more widgets at the following estimated prices:
a. What cost of goods sold and ending inventory would David record if he elects to use the LIFO method this year?
b. If David sells two widgets next year, what will be his cost of goods sold and ending inventory next year under the LIFO method?
c. How would you answer (a) and (b) if David had initially selected the first-in, first-out (FIFO) method instead of LIFO?
d. Suppose that David initially adopted the LIFO method, but wants to apply for a change to FIFO next year. What would be his §481 adjustment for this change, and in what year(s) would he make the adjustment?
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula Ending Inventory Formula =...
Step by Step Answer:
Taxation Of Individuals And Business Entities 2015
ISBN: 9780077862367
6th Edition
Authors: Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver