Question

The purchase schedule for Marin and Associates is as follows:

Date		Items Purchased		Cost per Item
March 15		6,300		$1.30
July 30		9,500		1.50
December 17		6,600		1.60
Total		22,400

The inventory balance as of the beginning of the year was $15,400 (15,400 units at $1), and an inventory count at year-end indicated that 11,300 items were on hand. Sales and operating expenses (excluding cost of goods sold) totaled $52,500 and $10,400, respectively. The federal income tax is 30 percent of taxable income.

Prepare three income statements, one under each of the assumptions: FIFO, average, and LIFO. (Round average cost per unit to 3 decimal places, e.g. 1.246 and final answers to 0 decimal places e.g. 58,971.)

Answer 1

STATEMENT SHOWING INVENTORY RECORD UNDER PERIODIC FIFO METHOD
	RECIEPTS	COST OF GOODS SOLD	BALANCE
DATE	UNITS	RATE	AMOUNT $	UNITS	RATE	AMOUNT $	UNITS	RATE	AMOUNT $
Balance	15400	1	15400	15400	1	15400
Purchasse
15-Mar	6300	1.3	8190	6300	1.3	8190
30-Jul	9500	1.5	14250	4800	1.5	7200	4700	1.5	7050
17-Dec	6600	1.6	10560				6600	1.6	10560
TOTAL	37800		48400	26500		30790	11300		17610
STATEMENT SHOWING INVENTORY RECORD UNDER PERIODIC AVERAGE METHOD
	RECIEPTS	COST OF GOODS SOLD	BALANCE
DATE	UNITS	RATE	AMOUNT $	UNITS	RATE	AMOUNT $	UNITS	RATE	AMOUNT $
Balance	15400	1	15400
Purchasse
15-Mar	6300	1.3	8190
30-Jul	9500	1.5	14250
17-Dec	6600	1.6	10560
TOTAL	37800	1.28	48400	26500	1.28	33920	11300	1.28	14480
STATEMENT SHOWING INVENTORY RECORD UNDER PERIODIC LIFO METHOD
	RECIEPTS	COST OF GOODS SOLD	BALANCE
DATE	UNITS	RATE	AMOUNT $	UNITS	RATE	AMOUNT $	UNITS	RATE	AMOUNT $
Balance	15400	1	15400	4100	1	4100	11300	1	11300
Purchasse
15-Mar	6300	1.3	8190	6300	1.3	8190
30-Jul	9500	1.5	14250	9500	1.5	14250
17-Dec	6600	1.6	10560	6600	1.6	10560
TOTAL	37800		48400	26500		37100	11300		11300
Income Statement
				FIFO	Averge	LIFO
Sales revenue			52500	52500	52500
Less: Cost of goods sold		30790	33920	37100
Gross Profit			21710	18580	15400
Less: Operating expense		10400	10400	10400
Operating income before tax		11310	8180	5000
Less: Tax @30%			3393	2454	1500
After tax income			7917	5726	3500