QP Corp. sold 4,000 units of its product at $50 per unit in year 2015 and incurred operating expenses of $5 per unit in selling the units. It began the year with 700 units in inventory and made successive purchases of its product as follows. Jan. I Beginning inventory 700 units @ $18.00 per unit Feb. 20 Purchase 1,700 units @ $19.00 per unit May 16 Oct. 3 Purchase 800 units @ $20.00 per unit Purchase 500 units @ $21.00 per unit Dec. II 2,300 units @ $22.00 per unit Purchase Total 6,000 units Required 1. Prepare comparative income statements similar to of FIFO, LIFO, and weighted average. (Round all amounts to cents.) Include a detailed cost of goods sold section as part of each statement. The company uses a periodic inventory system, and its income tax rate is 40%. for the three inventory costing methods 2. How would the financial results from using the three alternative inventory costing methods change if the company had been experiencing declining costs in its purchases of inventory? 3. What advantages and disadvantages are offered by using (a) LIFO and (b) FIFO? Assume the continu- ing trend of increasing costs.

QP Corp. sold 4,000 units of its product at $50 per unit in year 2015 and incurred operating expenses of $5 per unit in selling the units. It began the year with 700 units in inventory and made successive purchases of its product as follows. Jan. I Beginning inventory 700 units @ $18.00 per unit Feb. 20 Purchase 1,700 units @ $19.00 per unit May 16 Oct. 3 Purchase 800 units @ $20.00 per unit Purchase 500 units @ $21.00 per unit Dec. II 2,300 units @ $22.00 per unit Purchase Total 6,000 units Required 1. Prepare comparative income statements similar to of FIFO, LIFO, and weighted average. (Round all amounts to cents.) Include a detailed cost of goods sold section as part of each statement. The company uses a periodic inventory system, and its income tax rate is 40%. for the three inventory costing methods 2. How would the financial results from using the three alternative inventory costing methods change if the company had been experiencing declining costs in its purchases of inventory? 3. What advantages and disadvantages are offered by using (a) LIFO and (b) FIFO? Assume the continu- ing trend of increasing costs.

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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