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 /3,000/ $ 8

For the year:

b. Purchase, March 5/ 9,500/ 9

c. Purchase, September 19/ 5,000/ 11

d. Sale, April 15 (sold for $29 per unit) /4,000

e. Sale, October 31 (sold for $31 per unit)/ 8,000

f. Operating expenses (excluding income tax expense),/ $250,000

Required:

1. Calculate the number and cost of goods available for sale.

2. Calculate the number of units in ending inventory.

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

Answer 1

		Opening Stock & Purchases
		Unit	Unit Cost	Total Cost	Sales Units	Sales Price per unit	Total Sales Price
	Beginning Inventory	3000	$                         8.00	$                   24,000.00
	05-Mar	9500	$                         9.00	$                   85,500.00
	15-Apr				4000	29	116000
	19-Sep	5000	$                      11.00	$                   55,000.00
	31-Oct				8000	31	248000
		17500		$               1,64,500.00	12000		364000
	Inventory	5500
	FIFO Ending Inventory
(a)		Units	Rate	Total cost
	19-Sep	5000	$                      11.00	$                   55,000.00
	05-Mar	500	$                         9.00	$                     4,500.00
	Total	5500		$                   59,500.00
	FIFO -Cost of goods sold
	Cost of goods available for sales	$                        1,64,500.00
	Less: Ending Inventory	$                          -59,500.00
	Cost of goods sold	$                        1,05,000.00
(b)	LIFO Ending Inventory
		Units	Rate	Total cost
	Beginning Inventory	3000	$                         8.00	$                   24,000.00
	11-Jun	2500	$                         9.00	$                   22,500.00
		5500		$                   46,500.00
	LIFO-Cost of goods sold
	Cost of goods available for sales	$                        1,64,500.00
	Less: Ending Inventory	$                          -46,500.00
	Cost of goods sold	$                        1,18,000.00
(C )	Unit Price=	Total cost/Total Units
	Unit Price=	($164500/17500)
	Unit Price=	$                                      9.40
	Weighted Average Inventory
	Ending Inventory(Units)=(A)	5500
	Price per unit=(B)	$                                      9.40
	Ending Inventory Price=(A)*(B)	$                           51,700.00
	Cost of goods available for sales	$                        1,64,500.00
	Less: Ending Inventory	$                           51,700.00
	Cost of goods sold	$                        1,12,800.00
		Cost of Ending Inventory	Cost of goods sold
	FIFO	$                           59,500.00	$          1,05,000.00	ekkarill92 Next > < Previous Related Solutions Scoresby Inc. tracks the number of units purchased and sold throughout each year but applies its... 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... Scoresby Inc. tracks the number of units purchased and sold throughout each year but applies its... 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. 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