Chapter 6, Problem 6.28AP

Accounting for inventory using the perpetual inventory system-FIFO, LIFO, and weighted-average

Athletic Universe began January with merchandise inventory of 65 crates o f vitamins that cost a total of $3,835. During the month, Athletic Universe purchased and sold merchandise o n account as follows:

Jan. 5	Purchase	145 crates @ $ 80 each
13	Sale	160 crates @ $ 96 each
18	Purchase	170 crates @ $ 90 each
26	Sale	175 crates@$ 11 0 each

Requirements

1. Prepare a perpetual inventory record, using the FIFO inventory costing method, and determine the company’s cost of goods sold, ending merchandise inventor y, and gross profit.

2. Prepare a perpetual inventory record, using the LIFO inventory costing method, and determine the company's cost of goods sold, ending merchandise inventory, and gross profit.

3. Prepare a perpetual inventory record, using the weighted-average inventory costing method, and determine the company’s cost of goods sold, ending merchandise inventory, and gross profit. (Round weighted-average cost per unit to the nearest cent and all other amounts to the nearest dollar.)

4. If the business wanted to pay the least amount of income taxes possible, which method would it choose?