Mojo Industries tracks the number of units purchased and sold throughout each accounting period but applies its inventory costing method at the end of each period, as if it uses a periodic inventory system. Assume its accounting records provided the following information at the end of the accounting period, January 31. The inventory's selling price is $14 per unit. Transactions Unit Cost Inventory, January 1 $ 5.00 Units 190 Total Cost $ 950 Sale, January 10 (140) Purchase, January 12 5.50 240 1,320 Sale, January 17 (100) Purchase, January 26 6.50 70 455 Required: 1. Compute the amount of goods available for sale, ending inventory, and cost of goods sold at January 31 under each of the following inventory costing methods: a. Weighted average cost. b. First-in, first-out. c. Last-in, first-out. d. Specific identification, assuming that the January 10 sale was from the beginning inventory and the January 17 sale was from the January 12 purchase. 2-a. Of the four methods, which will result in the highest gros profit? 2-b. Of the four methods, which will result in the lowest income taxes?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Mojo Industries tracks the number of units purchased and sold throughout each accounting period but applies its inventory costing
method at the end of each period, as if it uses a periodic inventory system. Assume its accounting records provided the following
information at the end of the accounting period, January 31. The inventory's selling price is $14 per unit.
Transactions
Unit
Cost
Inventory, January 1
$ 5.00
Units
190
Total Cost
$ 950
Sale, January 10
(140)
Purchase, January 12
5.50
240
1,320
Sale, January 17
(100)
Purchase, January 26
6.50
70
455
Required:
1. Compute the amount of goods available for sale, ending inventory, and cost of goods sold at January 31 under each of the following
inventory costing methods:
a. Weighted average cost.
b. First-in, first-out.
c. Last-in, first-out.
d. Specific identification, assuming that the January 10 sale was from the beginning inventory and the January 17 sale was from the
January 12 purchase.
2-a. Of the four methods, which will result in the highest gros profit?
2-b. Of the four methods, which will result in the lowest income taxes?
Transcribed Image Text:Mojo Industries tracks the number of units purchased and sold throughout each accounting period but applies its inventory costing method at the end of each period, as if it uses a periodic inventory system. Assume its accounting records provided the following information at the end of the accounting period, January 31. The inventory's selling price is $14 per unit. Transactions Unit Cost Inventory, January 1 $ 5.00 Units 190 Total Cost $ 950 Sale, January 10 (140) Purchase, January 12 5.50 240 1,320 Sale, January 17 (100) Purchase, January 26 6.50 70 455 Required: 1. Compute the amount of goods available for sale, ending inventory, and cost of goods sold at January 31 under each of the following inventory costing methods: a. Weighted average cost. b. First-in, first-out. c. Last-in, first-out. d. Specific identification, assuming that the January 10 sale was from the beginning inventory and the January 17 sale was from the January 12 purchase. 2-a. Of the four methods, which will result in the highest gros profit? 2-b. Of the four methods, which will result in the lowest income taxes?
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