Chapter 6, Problem 6.33BP

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

Fit World began January with merchandise inventory of 90 crates of vitamins that cost a total of $5,850. During the month, Fit World purchased and sold merchandise on account as follows:

Jan. 2	Purchase	130 crates @ $ 76 each
5	Sale	140 crates @ $ 100 each
16	Purchase	170 crates @ $ 86 each
27	Sale	180 crates @ $ 104 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 inventory, 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?