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Scoresby Incorporated tracks the number of units purchased and sold throughout each year but applies its inventory costing meth at the end of the year, as if it uses a periodic inventory system. Assume its accounting records provided the following information a the end of the annual accounting period. December 31. Transactions a. Inventory, Beginning For the year: b. Purchase, March 51 Units 4,000 10,000 6,000 4,500 9,000 Unit Cost $.20 21 23 c. Purchase, September 19 d. Sale, April 15 (sold for $65 per unit) e. Sale, October 11 (sold for $68 per unit) f. Operating expenses (excluding income tax expense), $615,000 Required: 1. Calculate the number and cost of goods available for sale. 2. Calculate the number of units in ending inventory. 3. Compute the cost of ending inventory and cost of goods sold under (a) FIFO, (b) LIFO, and (c) weighted avage cost 4. Prepare an income statement that shows the FIFO method, LIFO method and weighted average method. 6. Which inventory costing method minimizes income taxes?

Scoresby Incorporated tracks the number of units purchased and sold throughout each year but applies its inventory costing meth at the end of the year, as if it uses a periodic inventory system. Assume its accounting records provided the following information a the end of the annual accounting period. December 31. Transactions a. Inventory, Beginning For the year: b. Purchase, March 51 Units 4,000 10,000 6,000 4,500 9,000 Unit Cost $.20 21 23 c. Purchase, September 19 d. Sale, April 15 (sold for $65 per unit) e. Sale, October 11 (sold for $68 per unit) f. Operating expenses (excluding income tax expense), $615,000 Required: 1. Calculate the number and cost of goods available for sale. 2. Calculate the number of units in ending inventory. 3. Compute the cost of ending inventory and cost of goods sold under (a) FIFO, (b) LIFO, and (c) weighted avage cost 4. Prepare an income statement that shows the FIFO method, LIFO method and weighted average method. 6. Which inventory costing method minimizes income taxes?

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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E7-9 (Algo) Analyzing and Interpreting the Financial Statement Effects of FIFO, LIFO, and Weighted Average Cost [LO 7-3] Scoresby Incorporated tracks the number of units purchased and sold throughout each year but applies its inventory costing method at the end of the year, as if it uses a periodic inventory system. Assume its accounting records provided the following information at the end of the annual accounting period. December 31. Transactions a. Inventory, Beginning For the year: b. Purchase, March 5 c. Purchase, September 19. d. Sale, April 15 (sold for $65 per unit) Units 4,000 10,000 6,000 4,500 9,000 Unit Cost $.20 21 23 e. Sale, October 11 (sold for $68 per unit) f. Operating expenses (excluding income tax expense), $615,000 Required: 1. Calculate the number and cost of goods available for sale. 2. Calculate the number of units in ending inventory. 3. Compute the cost of ending Inventory and cost of goods sold under (a) FIFO, (b) LIFO, and (c) weighted average cost 4. Prepare an income statement that shows the FIFO method, LIFO method and weighted average method. 6. Which inventory costing method minimizes income taxes?
Transcribed Image Text:E7-9 (Algo) Analyzing and Interpreting the Financial Statement Effects of FIFO, LIFO, and Weighted Average Cost [LO 7-3] Scoresby Incorporated tracks the number of units purchased and sold throughout each year but applies its inventory costing method at the end of the year, as if it uses a periodic inventory system. Assume its accounting records provided the following information at the end of the annual accounting period. December 31. Transactions a. Inventory, Beginning For the year: b. Purchase, March 5 c. Purchase, September 19. d. Sale, April 15 (sold for $65 per unit) Units 4,000 10,000 6,000 4,500 9,000 Unit Cost $.20 21 23 e. Sale, October 11 (sold for $68 per unit) f. Operating expenses (excluding income tax expense), $615,000 Required: 1. Calculate the number and cost of goods available for sale. 2. Calculate the number of units in ending inventory. 3. Compute the cost of ending Inventory and cost of goods sold under (a) FIFO, (b) LIFO, and (c) weighted average cost 4. Prepare an income statement that shows the FIFO method, LIFO method and weighted average method. 6. Which inventory costing method minimizes income taxes?
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