Required: 1-a. Compute cost of goods sold under the FIFO, LIFO, and average cost inventory costing methods. 1-b. Prepare income statements under the FIFO, LIFO, and average cost inventory costing methods.
Required: 1-a. Compute cost of goods sold under the FIFO, LIFO, and average cost inventory costing methods. 1-b. Prepare income statements under the FIFO, LIFO, and average cost inventory costing methods.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Required information
E7-11 (Static) Evaluating the Choice among Three Alternative Inventory Methods Based on Income and
Cash Flow Effects LO7-2, 7-3
[The following information applies to the questions displayed below.]
Daniel Company uses a periodic inventory system. Data for the current year: beginning merchandise inventory (ending
inventory December 31, prior year), 2,000 units at $38; purchases, 8,000 units at $40; expenses (excluding income taxes),
$184,500; ending inventory per physical count at December 31, current year, 1,800 units; sales, 8,200 units; sales price per
unit, $75; and average income tax rate, 30 percent.
E7-11 Part 1
Required:
1-a. Compute cost of goods sold under the FIFO, LIFO, and average cost inventory costing methods.
1-b. Prepare income statements under the FIFO, LIFO, and average cost inventory costing methods.
Complete this question by entering your answers in the tabs below.
Required 1A Required 1B
Compute cost of goods sold under the FIFO, LIFO, and average cost inventory costing methods. (Do not round your
intermediate calculations.)
Cost of Goods Sold
Beginning inventory
Purchases
Goods available for sale
Ending inventory
Cost of goods sold
Units
0
Inventory Costing Method
FIFO
LIFO
< Required 1A
0
0
Average Cost
Required 1B >
0](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F266d5c88-4132-4eca-8561-6ebd3b0393f5%2F211aa680-0ec3-4dec-bfe4-08328023d174%2Fw0ktdn_processed.png&w=3840&q=75)
Transcribed Image Text:!
Required information
E7-11 (Static) Evaluating the Choice among Three Alternative Inventory Methods Based on Income and
Cash Flow Effects LO7-2, 7-3
[The following information applies to the questions displayed below.]
Daniel Company uses a periodic inventory system. Data for the current year: beginning merchandise inventory (ending
inventory December 31, prior year), 2,000 units at $38; purchases, 8,000 units at $40; expenses (excluding income taxes),
$184,500; ending inventory per physical count at December 31, current year, 1,800 units; sales, 8,200 units; sales price per
unit, $75; and average income tax rate, 30 percent.
E7-11 Part 1
Required:
1-a. Compute cost of goods sold under the FIFO, LIFO, and average cost inventory costing methods.
1-b. Prepare income statements under the FIFO, LIFO, and average cost inventory costing methods.
Complete this question by entering your answers in the tabs below.
Required 1A Required 1B
Compute cost of goods sold under the FIFO, LIFO, and average cost inventory costing methods. (Do not round your
intermediate calculations.)
Cost of Goods Sold
Beginning inventory
Purchases
Goods available for sale
Ending inventory
Cost of goods sold
Units
0
Inventory Costing Method
FIFO
LIFO
< Required 1A
0
0
Average Cost
Required 1B >
0
![Required information
E7-11 (Static) Evaluating the Choice among Three Alternative Inventory Methods Based on Income and
Cash Flow Effects LO7-2, 7-3
[The following information applies to the questions displayed below.]
Daniel Company uses a periodic inventory system. Data for the current year: beginning merchandise inventory (ending
inventory December 31, prior year), 2,000 units at $38; purchases, 8,000 units at $40; expenses (excluding income taxes),
$184,500; ending inventory per physical count at December 31, current year, 1,800 units; sales, 8,200 units; sales price per
unit, $75; and average income tax rate, 30 percent.
E7-11 Part 2
2. Between FIFO and LIFO, which method is preferable in terms of (a) net income and (b) income taxes paid (cash flow)?
Net income
Income taxes paid](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F266d5c88-4132-4eca-8561-6ebd3b0393f5%2F211aa680-0ec3-4dec-bfe4-08328023d174%2F9m89aed_processed.png&w=3840&q=75)
Transcribed Image Text:Required information
E7-11 (Static) Evaluating the Choice among Three Alternative Inventory Methods Based on Income and
Cash Flow Effects LO7-2, 7-3
[The following information applies to the questions displayed below.]
Daniel Company uses a periodic inventory system. Data for the current year: beginning merchandise inventory (ending
inventory December 31, prior year), 2,000 units at $38; purchases, 8,000 units at $40; expenses (excluding income taxes),
$184,500; ending inventory per physical count at December 31, current year, 1,800 units; sales, 8,200 units; sales price per
unit, $75; and average income tax rate, 30 percent.
E7-11 Part 2
2. Between FIFO and LIFO, which method is preferable in terms of (a) net income and (b) income taxes paid (cash flow)?
Net income
Income taxes paid
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