Daniel Company uses a periodic inventory system. Data for the current year: beginning merchandise inventory (ending inventory December 31, prior year), 2,090 units at $36; purchases, 7,860 units at $38; expenses (excluding income taxes), $193,300; ending inventory per physical count at December 31, current year, 1,680 units; sales, 8,270 units; sales price per unit, $78; and average income tax rate, 34 percent. Required: 1-a. Compute cost of goods sold under the FIFO, LIFO, and average cost inventory costing methods. 1-b. Prepare income statements under the FIFO, LIFO, and average cost inventory costing methods. 2. Between FIFO and LIFO, which method is preferable in terms of (a) net income and (b) income taxes paid (cash flow)? 3. Between FIFO and LIFO, which method is preferable in terms of (a) net income and (b) income taxes paid (cash flow), assuming that prices were falling?

Daniel Company uses a periodic inventory system. Data for the current year: beginning merchandise inventory (ending inventory December 31, prior year), 2,090 units at $36; purchases, 7,860 units at $38; expenses (excluding income taxes), $193,300; ending inventory per physical count at December 31, current year, 1,680 units; sales, 8,270 units; sales price per unit, $78; and average income tax rate, 34 percent. Required: 1-a. Compute cost of goods sold under the FIFO, LIFO, and average cost inventory costing methods. 1-b. Prepare income statements under the FIFO, LIFO, and average cost inventory costing methods. 2. Between FIFO and LIFO, which method is preferable in terms of (a) net income and (b) income taxes paid (cash flow)? 3. Between FIFO and LIFO, which method is preferable in terms of (a) net income and (b) income taxes paid (cash flow), assuming that prices were falling?

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Description: karansubject-Accounting Daniel Company uses a periodic inventory system. Data for the current year: beginning merchandise inventory(ending inventory December 31, prior year), 2,090 units at $36; purchases, 7,860 units at $38; expenses(excluding incom

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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