Question:23M reports following for the month of April.Unit cost orsellingpriceDateExplanationUnits1-Apr Inventory120657-Apr Purchase707512-Apr Sale6013022-Apr Purchase708525-Apr Sale4014030-Apr Inventory160a) For each of the following assumptions, calculate (i) ending inventory, (ii) cost of goods sold& (iii) gross profit. [3*3]1. FIFO2. LIFO3. Average costb) Which method gives higher net income? Why? [0.5]c) Which method results in the higher income taxes? Why? [0.5]

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Description: Question:23M reports following for the month of April.Unit cost orsellingpriceDateExplanationUnits1-Apr Inventory120657-Apr Purchase707512-Apr Sale6013022-Apr Purchase708525-Apr Sale4014030-Apr Inventory160a) For each of the following assumptions, c

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Question:2 3M reports following for the month of April. Unit cost or Units selling price Date Explanation 1-Apr Inventory 120 65 7-Apr Purchase 70 75 12-Apr Sale 60 130 22-Apr Purchase 70 85 25-Apr Sale 40 140 30-Apr Inventory 160 a) For cach of the following assumptions, calculate (i) ending inventory, (ii) cost of goods sol & (iii) gross profit. [3*3] 1. FIFO 2. LIFO 3. Average cost b) Which method gives higher net income? Why? [0.5] c) Which method results in the higher income taxes? Why? [0.5]

Question:2 3M reports following for the month of April. Unit cost or Units selling price Date Explanation 1-Apr Inventory 120 65 7-Apr Purchase 70 75 12-Apr Sale 60 130 22-Apr Purchase 70 85 25-Apr Sale 40 140 30-Apr Inventory 160 a) For cach of the following assumptions, calculate (i) ending inventory, (ii) cost of goods sol & (iii) gross profit. [3*3] 1. FIFO 2. LIFO 3. Average cost b) Which method gives higher net income? Why? [0.5] c) Which method results in the higher income taxes? Why? [0.5]

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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[The following information applies to the questions displayed below.] Trey Monson starts a merchandising business on December 1 and enters into the following three inventory purchases. Monson uses a perpetual inventory system. Also, on December 15, Monson sells 15 units for $23 each. Purchases on December 7 Purchases on December 14 Purchases on December 21 10 units @ $9.00 cost 20 units @ $15.00 cost 15 units @ $17.00 cost Determine the costs assigned to ending inventory when costs are assigned based on the LIFO method. Perpetual LIFO: Goods purchased Cost of Goods Sold Cost of Goods # of Date Cost per Cost per Cost of ( unit # of units Available for units unit Sol Sale sold December 7 10 at $ 9.00 $ 90.00 20 at $ 15.00 $ 300.00 December 14 Total December 14 15 at $ 23.00 = December 15 Total December 15 15 at $ 17.00 $ 255.00 %3D December 21 Totals
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