The Ryan Corporation uses the periodic inventory method. The following data were available for the year ended October 31, 2021. Transaction Quantity Price Qty*Price Inventory October 31, 2020 6000 8 48000 March Purchase 1500 9. 13500 May Purchase 1800 10 18000 June Purchase 800 11 8800 July Sales 6000 15 90000 Required (To prevent difficulties with rounding, please calculate the unit cost of ending inventory to two decimal places ): Assuming the company uses FIFO, compute gross margin for the Ryan Company in the 2021 fiscal year. Assuming the company uses LIFO, compute gross margin for the Ryan Company in the 2021 fiscal year. Assuming the company uses the Weighted Average method, compute gross margin for the Ryan Company in the 2021 fiscal year. If income taxes are 30% and the authorities permit firms to choose a stock flow assumption, what are the potential savings from using LIFO vs FIFO? Why? Compute the LIFO Reserve Upon completion, enter the following data here: FIFO Gross Margin: 42000 LIFO Gross Margin: 34500 Gross Margin - Weighted Average Method: 37560 Savings from using LIFO: The LIFO reserve:
The Ryan Corporation uses the periodic inventory method. The following data were available for the year ended October 31, 2021. Transaction Quantity Price Qty*Price Inventory October 31, 2020 6000 8 48000 March Purchase 1500 9. 13500 May Purchase 1800 10 18000 June Purchase 800 11 8800 July Sales 6000 15 90000 Required (To prevent difficulties with rounding, please calculate the unit cost of ending inventory to two decimal places ): Assuming the company uses FIFO, compute gross margin for the Ryan Company in the 2021 fiscal year. Assuming the company uses LIFO, compute gross margin for the Ryan Company in the 2021 fiscal year. Assuming the company uses the Weighted Average method, compute gross margin for the Ryan Company in the 2021 fiscal year. If income taxes are 30% and the authorities permit firms to choose a stock flow assumption, what are the potential savings from using LIFO vs FIFO? Why? Compute the LIFO Reserve Upon completion, enter the following data here: FIFO Gross Margin: 42000 LIFO Gross Margin: 34500 Gross Margin - Weighted Average Method: 37560 Savings from using LIFO: The LIFO reserve:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Please solve the question(sub-part) 4 and 5, and if you could kindly check the answer of the question 1-3 is right or not, will be highly appreciated!
Transcribed Image Text:Problem 7-4: The Ryan Corporation
The Ryan Corporation uses the periodic inventory method. The following data were available for the year ended October 31, 2021.
Transaction
Quantity
Price
Qty*Price
Inventory October 31, 2020
6000
8
48000
March Purchase
1500
9.
13500
May Purchase
June Purchase
1800
10
18000
800
11
8800
July Sales
6000
15
90000
Required (To prevent difficulties with rounding, please calculate the unit cost of ending inventory to two decimal places ):
1. Assuming the company uses FIFO, compute gross margin for the Ryan Company in the 2021 fiscal year.
2. Assuming the company uses LIFO, compute gross margin for the Ryan Company in the 2021 fiscal year.
3. Assuming the company uses the Weighted Average method, compute gross margin for the Ryan Company in the 2021 fiscal year.
4. If income taxes are 30% and the authorities permit firms to choose a stock flow assumption, what are the potential savings from using
LIFO vs FIFO? Why?
5. Compute the LIFO Reserve
Upon completion, enter the following data here:
FIFO Gross Margin:
42000
LIFO Gross Margin:
34500
Gross Margin - Weighted Average Method:
37560
Savings from using LIFO:
The LIFO reserve:
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