On February 27, 2019, Webmaster, Inc. sold 1200 printer to Marine Supplies. Prior to this sale the Webmaster perpetual inventory records for these units included the following cost layers: Purchase Date Unit Cost Total Cost 7,000 Quantity Feb. 12, 2019 500 14 Feb. 18, 2019 1400 16 22,400 Total on hand 1,900 29400 Required: a. Complete a subsidiary ledger record for the printer using each of the three inventory valuation methods listed below; Page 2 1. Average cost. 2. FIFO. 3. LIFO. Your inventory records should show both (12. Feb and 18. Feb) purchases of this product, the sale on February 27, and the balance on hand at Feb 28, 2019. b. Refer to the cost of goods sold figures (computed column of sold items in subsidiary ledger). For financial reporting purposes, can the company use the valuation method that resulted in the highest cost of goods sold if, for tax purposes, it used the method that resulted in the lowest cost of goods sold? Explain.

On February 27, 2019, Webmaster, Inc. sold 1200 printer to Marine Supplies. Prior to this sale the Webmaster perpetual inventory records for these units included the following cost layers: Purchase Date Unit Cost Total Cost 7,000 Quantity Feb. 12, 2019 500 14 Feb. 18, 2019 1400 16 22,400 Total on hand 1,900 29400 Required: a. Complete a subsidiary ledger record for the printer using each of the three inventory valuation methods listed below; Page 2 1. Average cost. 2. FIFO. 3. LIFO. Your inventory records should show both (12. Feb and 18. Feb) purchases of this product, the sale on February 27, and the balance on hand at Feb 28, 2019. b. Refer to the cost of goods sold figures (computed column of sold items in subsidiary ledger). For financial reporting purposes, can the company use the valuation method that resulted in the highest cost of goods sold if, for tax purposes, it used the method that resulted in the lowest cost of goods sold? Explain.

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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