McRay Company merchandises a single product called Bright. The following data pertain to the beginning inventory and purchases of Bright during the past year: January 1 inventory …….. 34,000 units @ $11.00February purchases …….. 40,000 units @ $12.00March purchases ……… 80,000 units @ $12.40May purchases ……….. 60,000 units @ $12.60July purchases ……….. 100,000 units @ $12.80September purchases ……. 80,000 units @ $12.60November purchases ……. 30,000 units @ $13.00Sales of Bright totaled 393,000 units at $20.00 per unit. Selling and administrative expenses totaled $2,551,000 for the year. McRay Company uses the periodic inventory system.REQUIRED1. Prepare a schedule to compute the cost of goods available for sale.2. Compute income before income taxes under each of the following inventory cost flow assumptions: (a) The average-cost method, (b) The FIFO method, (c) The LIFO method.3. Compute inventory turnover and days’ inventory on hand under each of the inventory cost flow assumptions listed in requirement 2. What conclusion can you draw?View Solution: McRay Company merchandises a single product called Bright The following
McRay Company merchandises a single product called Bright. The following data pertain to the beginning inventory and purchases of Bright during the past year: January 1 inventory …….. 34,000 units @ $11.00February purchases …….. 40,000 units @ $12.00March purchases ……… 80,000 units @ $12.40May purchases ……….. 60,000 units @ $12.60July purchases ……….. 100,000 units @ $12.80September purchases ……. 80,000 units @ $12.60November purchases ……. 30,000 units @ $13.00Sales of Bright totaled 393,000 units at $20.00 per unit. Selling and administrative expenses totaled $2,551,000 for the year. McRay Company uses the periodic inventory system.REQUIRED1. Prepare a schedule to compute the cost of goods available for sale.2. Compute income before income taxes under each of the following inventory cost flow assumptions: (a) The average-cost method, (b) The FIFO method, (c) The LIFO method.3. Compute inventory turnover and days’ inventory on hand under each of the inventory cost flow assumptions listed in requirement 2. What conclusion can you draw?View Solution:
McRay Company merchandises a single product called Bright The following
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