QP Corporation sold 4,000 units of its product at $50 per unit during the year and incurred operating expenses of $5 per unit in sellingthe units. It began the year with 700 units in inventory and made successive purchases of its product as follows.January 1February 20May 16October 3December 11Beginning inventoryPurchasePurchasePurchasePurchaseTotalRequired:1. Prepare comparative year-end income statements for the three inventory costing methods of FIFO, LIFO, and weighted averagewhich includes a detailed cost of goods sold section as part of each statement. The company uses a periodic inventory system.(Round your average cost per unit to 2 decimal places and round your final answers to nearest whole dollar amount.)QP CORPORATIONIncome Statements Comparing FIFO, LIFO, and Weighted AverageFor Year Ended December 31SalesCost of goods sold:Beginning inventory, January 1Cost of purchasesCost of goods available for saleLess: Ending inventory, December 31Cost of goods soldGross profitOperating expensesNet income700 units @ $18 per unit1,700 units @ $19 per unit800 units @ $20 per unit500 units $21 per unit2,300 units @ $22 per unit6,000 units$FIFO0000 $LIFO000WeightedAverage0 $0000

Answered: QP Corporation sold 4,000 units of its…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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QP Corporation sold 4,000 units of its product at $50 per unit during the year 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.
January 1
February 20
May 16
October 3
December 11
Beginning inventory
Purchase
Purchase
Purchase
Purchase
Total
Required:
1. Prepare comparative year-end income statements for the three inventory costing methods of FIFO, LIFO, and weighted average
which includes a detailed cost of goods sold section as part of each statement. The company uses a periodic inventory system.
(Round your average cost per unit to 2 decimal places and round your final answers to nearest whole dollar amount.)
QP CORPORATION
Income Statements Comparing FIFO, LIFO, and Weighted Average
For Year Ended December 31
Sales
Cost of goods sold:
Beginning inventory, January 1
Cost of purchases
Cost of goods available for sale
Less: Ending inventory, December 31
Cost of goods sold
Gross profit
Operating expenses
Net income
700 units @ $18 per unit
1,700 units @ $19 per unit
800 units @ $20 per unit
500 units $21 per unit
2,300 units @ $22 per unit
6,000 units
$
FIFO
0
0
0
0 $
LIFO
0
0
0
Weighted
Average
0 $
0
0
0
0

Expert Solution

Step 1

Periodic Inventory System:

Under this system,entire stock is verified at a time at periodic intervals. So stock taking at the end of the year is called periodic stock taking or periodic inventory system.The entire materials are physically counted and the value of closing stock is ascertained for the purpose of final accounts preparation.Different methods are used for stock valuation.

1.FIFO : In this method,materials received first are issued first.

2.LIFO: In this case ,materials received last are issued first.It is just opposite to FIFO method.

3.Weighted average method: Here average cost is used for inventory valuation.

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