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Filimonov Inc. has the following information related to purchases and sales of one of its inventory items: Date Description Units Purchased at Cost Units Sold at Retail June 1 Beginning Inventory 200 units @ $10 = $2,000 9 Purchase 1 300 units @ $12 = $3,600 14 Sale 1 22 Purchase 2 400 units @ $25 250 units @ $14 = $3,500 29 Sale 2 225 units @ $25 Assume that Filimonov uses a perpetual inventory system. Required: 1. In a period of rising prices, which inventory costing method produces the highest amount for ending inventory? 2. In a period of rising prices, which inventory costing method produces the highest net income? 3. In a period of rising prices, which inventory costing method produces the lowest payment for income taxes?

Filimonov Inc. has the following information related to purchases and sales of one of its inventory items: Date Description Units Purchased at Cost Units Sold at Retail June 1 Beginning Inventory 200 units @ $10 = $2,000 9 Purchase 1 300 units @ $12 = $3,600 14 Sale 1 22 Purchase 2 400 units @ $25 250 units @ $14 = $3,500 29 Sale 2 225 units @ $25 Assume that Filimonov uses a perpetual inventory system. Required: 1. In a period of rising prices, which inventory costing method produces the highest amount for ending inventory? 2. In a period of rising prices, which inventory costing method produces the highest net income? 3. In a period of rising prices, which inventory costing method produces the lowest payment for income taxes?

FINANCIAL ACCOUNTING
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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Filimonov Inc. has the following information related to purchases and sales of one of its inventory items: Date Description Units Purchased at Cost Units Sold at Retail June 1 Beginning Inventory 200 units @$10 - $2,000 = 9 Purchase 1 300 units @ $12 $3,600 === 400 units @ $25 14 Sale 1 22 Purchase 2 29 Sale 2 250 units @ $14-$3,500 225 units @ $25 Assume that Filimonov uses a perpetual inventory system. Required: 1. In a period of rising prices, which inventory costing method produces the highest amount for ending inventory? 2. In a period of rising prices, which inventory costing method produces the highest net income? 3. In a period of rising prices, which inventory costing method produces the lowest payment for income taxes? 4. In a period of rising prices, which inventory method generally produces the most realistic amount for cost of goods sold? In a period of rising prices, which inventory method generally produces the most realistic amount for inventory?
Transcribed Image Text:Filimonov Inc. has the following information related to purchases and sales of one of its inventory items: Date Description Units Purchased at Cost Units Sold at Retail June 1 Beginning Inventory 200 units @$10 - $2,000 = 9 Purchase 1 300 units @ $12 $3,600 === 400 units @ $25 14 Sale 1 22 Purchase 2 29 Sale 2 250 units @ $14-$3,500 225 units @ $25 Assume that Filimonov uses a perpetual inventory system. Required: 1. In a period of rising prices, which inventory costing method produces the highest amount for ending inventory? 2. In a period of rising prices, which inventory costing method produces the highest net income? 3. In a period of rising prices, which inventory costing method produces the lowest payment for income taxes? 4. In a period of rising prices, which inventory method generally produces the most realistic amount for cost of goods sold? In a period of rising prices, which inventory method generally produces the most realistic amount for inventory?
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