Homework Help is Here – Start Your Trial Now!
Business
Accounting
Daniel Company uses a periodic inventory system. Data for the current year: beginning merchandise inventory (ending inventory December 31, prior year), 2,040 units at $37; purchases, 7,900 units at $39; expenses (excluding income taxes), $192,900; ending inventory per physical count at December 31, current year, 1,610 units; sales, 8,330 units; sales price per unit, $78; and average income tax rate, 30 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), 2,040 units at $37; purchases, 7,900 units at $39; expenses (excluding income taxes), $192,900; ending inventory per physical count at December 31, current year, 1,610 units; sales, 8,330 units; sales price per unit, $78; and average income tax rate, 30 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?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Topic Video
Question

Subject: accounting 

 

 

Daniel Company uses a periodic inventory system. Data for the current year: beginning merchandise inventory (ending inventory December 31, prior year), 2,040 units at $37; purchases, 7,900 units at $39; expenses (excluding income taxes), $192,900; ending inventory per physical count at December 31, current year, 1,610 units; sales, 8,330 units; sales price per unit, $78; and average income tax rate, 30 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? Complete this question by entering your answers in the tabs below. Req la Req 1b Req 2 Req 3 Compute cost of goods sold under the FIFO, LIFO, and average cost inventory costing methods. Note: Do not round your intermediate calculations. Round your final answers to the nearest whole dollar amount. Cost of Goods Sold Beginning inventory Purchases Goods available for sale Ending inventory Cost of goods sold Units Inventory Costing Method FIFO LIFO 2,040 7,900 9,940 1,610 8,330 Req 1a 0 0 Average Cost Req 1b > 0 Show less A
Transcribed Image Text:Daniel Company uses a periodic inventory system. Data for the current year: beginning merchandise inventory (ending inventory December 31, prior year), 2,040 units at $37; purchases, 7,900 units at $39; expenses (excluding income taxes), $192,900; ending inventory per physical count at December 31, current year, 1,610 units; sales, 8,330 units; sales price per unit, $78; and average income tax rate, 30 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? Complete this question by entering your answers in the tabs below. Req la Req 1b Req 2 Req 3 Compute cost of goods sold under the FIFO, LIFO, and average cost inventory costing methods. Note: Do not round your intermediate calculations. Round your final answers to the nearest whole dollar amount. Cost of Goods Sold Beginning inventory Purchases Goods available for sale Ending inventory Cost of goods sold Units Inventory Costing Method FIFO LIFO 2,040 7,900 9,940 1,610 8,330 Req 1a 0 0 Average Cost Req 1b > 0 Show less A
Prepare income statements under the FIFO, LIFO, and average cost inventory costing methods. Note: Do not round your intermediate calculations. Round your final answers to the nearest whole dollar amount. Use the COGS amount from Required 1a. Income Statement Sales Revenue Cost of goods sold Gross profit Operating expenses Pretax income Income tax expense Net income FIFO LIFO $ $ 649,740 649,740 < Req 1a Average Cost $ 649,740 Req 2 > Show less
Transcribed Image Text:Prepare income statements under the FIFO, LIFO, and average cost inventory costing methods. Note: Do not round your intermediate calculations. Round your final answers to the nearest whole dollar amount. Use the COGS amount from Required 1a. Income Statement Sales Revenue Cost of goods sold Gross profit Operating expenses Pretax income Income tax expense Net income FIFO LIFO $ $ 649,740 649,740 < Req 1a Average Cost $ 649,740 Req 2 > Show less
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Accounting for Merchandise Inventory
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS