Futuristic Electronic Center began July with 60 units of merchandise inventory that cost $68 each. During July, the store made the following purchases:(Click the icon to view the purchases.)Futuristic uses the periodic inventory system, and the physical count at July 31 indicates that 90 units of merchandise inventory are on hand.Read the requirements.Data tableJul. 3Jul. 12Jul. 1840 units @ $72 each50 units @ $90 each30 units @ $92 eachXRequirements1. Determine the ending merchandise inventory and cost of goods sold amountsfor the July financial statements using the FIFO, LIFO, and weighted-averageinventory costing methods.2. Sales revenue for July totaled $23,000. Compute Futuristic's gross profit forJuly using each method.3. Which method will result in the lowest income taxes for Futuristic? Why?Which method will result in the highest net income for Futuristic? Why?

Name: Futuristic Electronic Center began July with 60 units of merchandise
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Description: Futuristic Electronic Center began July with 60 units of merchandise inventory that cost $68 each. During July, the store made the following purchases:(Click the icon to view the purchases.)Futuristic uses the periodic inventory system, and the phys

The inventory can be valued using various methods as FIFO, LIFO and average method. The income tax expense differs under all methods.Part 1. FIFO LIFO Weighted average Cost of goods available for sale (a) $14,220 $14,220 $14,220 Cost of goods sold (b) $6,240 $7,980 $7,110 Ending inventory (a - b) $7,980 $6,240 $7,110 Total cost of goods available for sale = 60* $68 + 40 * $72 + 50 * $90 + 30 * $92 = $14,220 Units sold = 180 – 90 = 90 units Cost of goods sold – FIFO = 60 * $68 + 30 * $72 = $6,240 Cost of goods sold – LIFO = 30 * $92 + 50 * $90 + 10 * $72 = $7,980 Average cost per unit = $14,220 / 180 = $79 Cost of goods sold – weighted average method = 90 * $79 = $7,110 Part 2. Gross profit FIFO LIFO Weighted average Sales revenue $23,000 $23,000 $23,000 COGS $6,240 $7,980 $7,110 Gross profit (Sales - COGS) $16,760 $15,020 $15,890 Part 3. The LIFO method would result in lowest income taxes as it has the lowest gross profit earned with highest COGS. The FIFO method would result in highest income taxes as it has the highest gross profit earned with lowest COGS.

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Futuristic Electronic Center began July with 60 units of merchandise inventory that cost $68 each. During July, the store made the following purchases: (Click the icon to view the purchases.) Futuristic uses the periodic inventory system, and the physical count at July 31 indicates that 90 units of merchandise inventory are on hand. Read the requirements. Data table Jul. 3 Jul. 12 Jul. 18 - X 40 units @ $72 each 50 units @ $90 each 30 units @ $92 each Requirements 1. 2. 3. Determine the ending merchandise inventory and cost of goods sold amounts for the July financial statements using the FIFO, LIFO, and weighted-average inventory costing methods. Sales revenue for July totaled $23,000. Compute Futuristic's gross profit for July using each method. Which method will result in the lowest income taxes for Futuristic? Why? Which method will result in the highest net income for Futuristic? Why?

Futuristic Electronic Center began July with 60 units of merchandise inventory that cost $68 each. During July, the store made the following purchases: (Click the icon to view the purchases.) Futuristic uses the periodic inventory system, and the physical count at July 31 indicates that 90 units of merchandise inventory are on hand. Read the requirements. Data table Jul. 3 Jul. 12 Jul. 18 - X 40 units @ $72 each 50 units @ $90 each 30 units @ $92 each Requirements 1. 2. 3. Determine the ending merchandise inventory and cost of goods sold amounts for the July financial statements using the FIFO, LIFO, and weighted-average inventory costing methods. Sales revenue for July totaled $23,000. Compute Futuristic's gross profit for July using each method. Which method will result in the lowest income taxes for Futuristic? Why? Which method will result in the highest net income for Futuristic? Why?

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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