Question

Scoresby Inc. tracks the number of units purchased and sold throughout each year but applies its inventory costing method at the end of the year, as if it uses a periodic inventory system. Assume its accounting records provided the following information at the end of the annual accounting period, December 31.

  

Transactions	Units			Unit Cost
a. Inventory, Beginning		1,500		$	24
For the year:
b. Purchase, March 5		7,500			25
c. Purchase, September 19		3,500			27
d. Sale, April 15 (sold for $69 per unit)		2,400
e. Sale, October 31 (sold for $72 per unit)		6,500
f. Operating expenses (excluding income tax expense), $406,000

  

Required:

1. 3. Compute the cost of ending inventory and cost of goods sold under (a) FIFO, (b) LIFO, and (c) weighted average cost.
2. 4. Prepare an income statement that shows the FIFO method, LIFO method and weighted average method.
3. 6. Which inventory costing method minimizes income taxes?

Answer 1