Explanation Step 1: Calculate the cost of goods sold using LIFO method. Figure (1) Therefore, from the above table, the cost of goods sold is $3,024. Note : As it is LIFO method, the inventory purchased last will be used or sold first, hence, the inventory left out at the end would be the inventory purchased in the beginning. Therefore, take the price per unit from the beginning. Therefore, from the above table, the cost of goods sold is $3,024. Step 2: Calculate the cost of goods sold using FIFO method. Figure (2) Therefore, from the above table, the cost of goods sold is $2,915. Note : As it is FIFO method, the inventory purchased earlier will be used or sold first, hence, the inventory left out at the end would be the inventory purchased in the last. Therefore, take the price per unit from the last. Step 3: Calculate the amount of tax savings on LIFO cost of goods sold. Tax savings = LIFO cost of goods sold × Income tax rate = $3,024 × 25 % = $756 Step 4: Calculate the amount of tax savings on FIFO cost of goods sold

Financial Accounting Plus MyLab Accounting with Pearson eText -- Access Card Package (12th Edition)

12th Edition

ISBN: 9780134833132

Author: C. William Thomas, Wendy M. Tietz, Walter T. Harrison Jr.

Publisher: PEARSON

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Inventory Accounting

Inventory accounting is that branch of accounting that helps in determining the specific value of assets at different stages of production and development.

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Chapter 6, Problem 6.32BE

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To Calculate: The income tax advantage of Company S from using LIFO over FIFO.

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Chapter 6, Problem 6.31BE

Chapter 6, Problem 6.33BE

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Paul Company uses its periodic inventory system and you are given the following information: Sales... $65,100 $16,800 $14,700 $48,300 Inventory- Beginning. Inventory- Ending... Purchases.... ............ How much is the gross profit? A. $14,700. B. $50,400. C. $48,300. D. $65,100.

LIFO, FIFO, & Moving Average Cost: Perpetual Inventory Methods: Rock Shop shows the following data related to an item of inventory: Inventory, January 1st.............. 100 units @ $5.00 Purchase, January 9th............ 300 units @ $5.40 Sold, January 11th.. Purchase, January 19th............ Purchase, January 21st.... Sold, January 28th.... 325 units 70 @ $6.00 250 @$6.10 150 units Please answer the following questions under the Perpetual Inventory Method: 1) What is the value of Ending Inventory & COGS under the FIFO Method? 2) What is the value of Ending Inventory & COGS under the LIFO Method? 3) What is the value of Ending Inventory & COGS under the Moving Avg. Cost Method?

(Learning Objective 4: Compute and evaluate gross profit percentage and inventory turnover) The Red Wagon Shop had the following inventory data:2017Ending inventory at:FIFO Cost ...............LIFO Cost...............2018$27,92012,510$ 30,50020,150Cost of goods sold at:FIFO Cost ...............LIFO Cost...............Sales revenue ...............$ 87,63097,980138,000Company managers need to know the company’s gross profit percentage and rate of inventoryturnover for 2018 under1. FIFO.2. LIFO.Which method produces a higher gross profit percentage? A higher inventory turnover?

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Financial Accounting Plus MyLab Accounting with Pearson eText -- Access Card Package (12th Edition)

Ch. 6 - Ravenna Candles recently purchased candleholders...Ch. 6 - Which inventory system maintains a running record...Ch. 6 - How is cost of goods sold classified in the...Ch. 6 - Snyders total cost of goods available for sale...Ch. 6 - Snyders cost of goods sold using the average-cost...Ch. 6 - Snyders ending inventory using the FIFO method...Ch. 6 - Snyders cost of goods sold using the LIFO method...Ch. 6 - Which U.S. GAAP principle or rule would apply if...Ch. 6 - Corrigan Corporation had beginning inventory of...Ch. 6 - Corrigans gross profit for the period is a.79,000....

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