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		$	26
For the year:
b. Purchase, March 5		7,500			27
c. Purchase, September 19		3,500			29
d. Sale, April 15 (sold for $71 per unit)		2,300
e. Sale, October 31 (sold for $74 per unit)		6,500
f. Operating expenses (excluding income tax expense), $402,000 Prepare an income statement that shows the FIFO method, LIFO method and weighted average method. SCORESBY INC. Income Statement For the Year Ended December 31 FIFO LIFO Weighted Average Income (Loss) from Operations

Answer 1

• All working forms part of the answer
• Requirement asked =Income Statements
• Answer:

	FIFO	LIFO	Weighted Average Method
Sales Revenue	$ 644,300.00	$          644,300.00	$             644,300.00
(-) Cost of Goods Sold (as calculated below)	$ 236,100.00	$          244,600.00	$             241,472.00
Gross Profits	$ 408,200.00	$          399,700.00	$             402,828.00
(-) Operating Expenses	$ 402,000.00	$          402,000.00	$             402,000.00
Income (Loss) from Operations	$      6,200.00	$            (2,300.00)	$                     828.00

• Workings

FIFO	Cost of Goods available for sale			Cost of Goods Sold			Ending Inventory
	Units	Cost/unit	COG for sale	Units sold	Cost/unit	COGS	Units	Cost/unit	Ending inventory
Beginning Inventory	1500	$                26.00	$                      39,000.00	1500	$         26.00	$        39,000.00	0	$        26.00	$                         -
Purchases:
08-Nov	7500	$                27.00	$                    202,500.00	7300	$         27.00	$      197,100.00	200	$        27.00	$            5,400.00
17-Nov	3500	$                29.00	$                    101,500.00		$         29.00	$                        -	3500	$        29.00	$        101,500.00
TOTAL	12500		$                    343,000.00	8800		$      236,100.00	3700		$        106,900.00
LIFO	Cost of Goods available for sale			Cost of Goods Sold			Ending Inventory
	Units	Cost/unit	COG for sale	Units sold	Cost/unit	COGS	Units	Cost/unit	Ending inventory
Beginning Inventory	1500	$                26.00	$                      39,000.00		$         26.00	$                        -	1500	$        26.00	$          39,000.00
Purchases:	0	$                       -	$                                     -
08-Nov	7500	$                27.00	$                    202,500.00	5300	$         27.00	$      143,100.00	2200	$        27.00	$          59,400.00
17-Nov	3500	$                29.00	$                    101,500.00	3500	$         29.00	$      101,500.00	0	$        29.00	$                         -
TOTAL	12500		$                    343,000.00	8800		$      244,600.00	3700		$          98,400.00

Weighted Average (Periodic)	Units	Cost per unit	Total
Beginning Inventory	1500	$    26.00	$     39,000.00
Purchases:
08-Nov	7500	$    27.00	$   202,500.00
17-Nov	3500	$    29.00	$   101,500.00
Total Purchases	11000		$   304,000.00
Goods Available for Sales	12500		$   343,000.00
Weighted Average cost per unit		$ 27.440
Cost of Goods Sold	8800	$ 27.440	$   241,472.00
Ending Inventory	3700	$ 27.440	$   101,528.00