"Cowboy Jeans" Line # of Units Beginning Inventory Balance 3,500 Cost per Unit $13.10 Value $ 45,850 Purchases # of Units Cost per Unit Value April 5 1000 $13 $13,000 April 27 600 $12.75 $ 7,650 May 12 700 $12.70 $ 8,890 May 29 1500 $12.55 $ 18,825 June 23 1750 $12.40 $ 21,700 Total Value (BB + Purchases) $115,915 Ending physical inventory at June 30th: 3,800 As a training piece, Ryan explained three different ways the value of remaining inventory and the cost of goods sold could be determined (FIFO, LIFO, Average Cost). He said that the method used by Blue Jeans by the Pound was selected to meet the following financial goal: to have the lowest income tax expense. This meant the company wanted to have the lowest taxable income, which happens when the company shows the lowest profits. Based on this goal, he asked Katherine to do the following: • Calculate the total number of units sold during the quarter • Determine the value of the remaining inventory using FIFO and LIFO • Calculate the COGS under each method ⚫ Guess which method the company was using in order to meet its tax goals
"Cowboy Jeans" Line # of Units Beginning Inventory Balance 3,500 Cost per Unit $13.10 Value $ 45,850 Purchases # of Units Cost per Unit Value April 5 1000 $13 $13,000 April 27 600 $12.75 $ 7,650 May 12 700 $12.70 $ 8,890 May 29 1500 $12.55 $ 18,825 June 23 1750 $12.40 $ 21,700 Total Value (BB + Purchases) $115,915 Ending physical inventory at June 30th: 3,800 As a training piece, Ryan explained three different ways the value of remaining inventory and the cost of goods sold could be determined (FIFO, LIFO, Average Cost). He said that the method used by Blue Jeans by the Pound was selected to meet the following financial goal: to have the lowest income tax expense. This meant the company wanted to have the lowest taxable income, which happens when the company shows the lowest profits. Based on this goal, he asked Katherine to do the following: • Calculate the total number of units sold during the quarter • Determine the value of the remaining inventory using FIFO and LIFO • Calculate the COGS under each method ⚫ Guess which method the company was using in order to meet its tax goals
Chapter3: Setting Up A New Company
Section: Chapter Questions
Problem 4.4C
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not use ai please
Transcribed Image Text:"Cowboy Jeans" Line
# of Units
Beginning Inventory Balance
3,500
Cost per Unit
$13.10
Value
$ 45,850
Purchases
# of Units
Cost per Unit
Value
April 5
1000
$13
$13,000
April 27
600
$12.75
$ 7,650
May 12
700
$12.70
$ 8,890
May 29
1500
$12.55
$ 18,825
June 23
1750
$12.40
$ 21,700
Total Value (BB + Purchases)
$115,915
Ending physical inventory at June 30th: 3,800
As a training piece, Ryan explained three different ways the value of remaining
inventory and the cost of goods sold could be determined (FIFO, LIFO, Average
Cost). He said that the method used by Blue Jeans by the Pound was selected to meet
the following financial goal: to have the lowest income tax expense. This meant the
company wanted to have the lowest taxable income, which happens when the company
shows the lowest profits.
Based on this goal, he asked Katherine to do the following:
• Calculate the total number of units sold during the quarter
• Determine the value of the remaining inventory using FIFO and LIFO
• Calculate the COGS under each method
⚫ Guess which method the company was using in order to meet its tax goals
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