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Required: 1. Compute cost of goods sold under the FIFO, LIFO, and average cost inventory costing methods. 2. Prepare an income statement through pretax income for each method. Sales, 350 units; unit sales price, $50; Expenses, $1,700 3. Rank the three methods in order of income taxes paid (favorable cash flow).

Required: 1. Compute cost of goods sold under the FIFO, LIFO, and average cost inventory costing methods. 2. Prepare an income statement through pretax income for each method. Sales, 350 units; unit sales price, $50; Expenses, $1,700 3. Rank the three methods in order of income taxes paid (favorable cash flow).

FINANCIAL ACCOUNTING
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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Following is partial information for the income statement of Audio Solutions Company under three different inventory costing methods assuming the use of a periodic inventory system Required: 1. Compute cost of goods sold under the FIFO, LIFO, and average cost inventory costing methods. 2. Prepare an income statement through pretax income for each method. Sales, 350 units; unit sales price, $50; Expenses, $1,700 3. Rank the three methods in order of income taxes paid (favorable cash flow). Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Compute cost of goods sold under the FIFO, LIFO, and average cost inventory costing methods. Note: Do not round intermediate calculations. FIFO LIFO Average Cost Cost of goods sold Beginning inventory (400 units @ $28) $ 11,200 $ 11,200 $ 11,200 Purchases (475 units @ $35) 16,625 16,625 16,625 Goods available for sale Ending inventory (525 units) Cost of goods sold 27,825 27,825 27,825 18,025 15,575 $ 9,800 $ 12,250 Required 1 Required 2 >
Transcribed Image Text:Following is partial information for the income statement of Audio Solutions Company under three different inventory costing methods assuming the use of a periodic inventory system Required: 1. Compute cost of goods sold under the FIFO, LIFO, and average cost inventory costing methods. 2. Prepare an income statement through pretax income for each method. Sales, 350 units; unit sales price, $50; Expenses, $1,700 3. Rank the three methods in order of income taxes paid (favorable cash flow). Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Compute cost of goods sold under the FIFO, LIFO, and average cost inventory costing methods. Note: Do not round intermediate calculations. FIFO LIFO Average Cost Cost of goods sold Beginning inventory (400 units @ $28) $ 11,200 $ 11,200 $ 11,200 Purchases (475 units @ $35) 16,625 16,625 16,625 Goods available for sale Ending inventory (525 units) Cost of goods sold 27,825 27,825 27,825 18,025 15,575 $ 9,800 $ 12,250 Required 1 Required 2 >
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