Armed Forces Surplus began March 2021 with 100 stoves that cost $10 each. During the month, the company made the following purchases at cost: (Click the icon to view the purchases.) The company sold 312 stoves, and at March 31, the ending inventory consisted of 68 stoves. The sales price of each stove was $45. Read the requirements. Requirement 1. Determine the cost of goods sold and ending inventory amounts for October under the average-cost, FIFO, and LIFO costing methods. Round the average cost per unit two decimal places, and round all other amounts to the nearest dollar. Number of units Average cost $ $ Requirements $ FIFO Cost of goods sold Ending inventory Requirement 2. Explain why cost of goods sold is highest under LIFO. Be specific. Under LIFO the cost of goods sold is the highest because costs are rising and LIFO assigns the most recent units purchased to cost of goods sold. 1. Determine the cost of goods sold and ending inventory amounts for March under the average-cost, FIFO, and LIFO costing methods. Round the average cost per unit to 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 $4,750. The company uses average costing for inventory. The income tax rate is 30%. LIFO Sales revenue Cost of goods sold Gross profit Operating expenses Income before income taxes Income tax expense Net income $ Data table March 6 March 18 March 26 120 stoves @ 130 stoves @ 30 stoves @ $18= $25 = $27 = $ 2,160 3,250 810 -
Armed Forces Surplus began March 2021 with 100 stoves that cost $10 each. During the month, the company made the following purchases at cost: (Click the icon to view the purchases.) The company sold 312 stoves, and at March 31, the ending inventory consisted of 68 stoves. The sales price of each stove was $45. Read the requirements. Requirement 1. Determine the cost of goods sold and ending inventory amounts for October under the average-cost, FIFO, and LIFO costing methods. Round the average cost per unit two decimal places, and round all other amounts to the nearest dollar. Number of units Average cost $ $ Requirements $ FIFO Cost of goods sold Ending inventory Requirement 2. Explain why cost of goods sold is highest under LIFO. Be specific. Under LIFO the cost of goods sold is the highest because costs are rising and LIFO assigns the most recent units purchased to cost of goods sold. 1. Determine the cost of goods sold and ending inventory amounts for March under the average-cost, FIFO, and LIFO costing methods. Round the average cost per unit to 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 $4,750. The company uses average costing for inventory. The income tax rate is 30%. LIFO Sales revenue Cost of goods sold Gross profit Operating expenses Income before income taxes Income tax expense Net income $ Data table March 6 March 18 March 26 120 stoves @ 130 stoves @ 30 stoves @ $18= $25 = $27 = $ 2,160 3,250 810 -
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Armed Forces Surplus began March 2021 with 100 stoves that cost $10 each. During the month, the company made the following purchases at cost:
(Click the icon to view the purchases.)
The company sold 312 stoves, and at March 31, the ending inventory consisted of 68 stoves. The sales price of each stove was $45.
Read the requirements.
Requirement 1. Determine the cost of goods sold and ending inventory amounts for October under the average-cost, FIFO, and LIFO costing methods. Round the average cost per unit to
two decimal places, and round all other amounts to the nearest dollar.
Average cost
Cost of goods sold
Ending inventory
Number of units
$
$
Requirements
FIFO
Requirement 2. Explain why cost of goods sold is highest under LIFO. Be specific.
Under LIFO the cost of goods sold is the highest because costs are rising and LIFO assigns the most recent units purchased to cost of goods sold.
1. Determine the cost of goods sold and ending inventory amounts for March
under the average-cost, FIFO, and LIFO costing methods. Round the average
cost per unit to 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 $4,750. The company uses average costing
for inventory. The income tax rate is 30%.
LIFO
Sales revenue
Cost of goods sold
Gross profit
Operating expenses
Income before income taxes
Income tax expense
Net income
Data table
March 6
March 18
March 26
120 stoves @
130 stoves @
30 stoves @
$18
$25
$27
=
=
$ 2,160
3,250
810
I
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