Question

Crane Sports began operations on January 2, 2020. The following stock record card for footballs was taken from the records at the end of the year. Date Voucher Terms Units Received Unit Invoice Cost Gross Invoice Amount 1/15 10624 Net 30 51 $22 $1,122 3/15 11437 1/5, net 30 66 18 1,188 6/20 21332 1/10, net 30 91 17 1,547 9/12 27644 1/10, net 30 85 13 1,105 11/24 31269 1/10, net 30 77 12 924 Totals 370 $5,886 A physical inventory on December 31, 2020, reveals that 108 footballs were in stock. The bookkeeper informs you that all the discounts were taken. Assume that Crane Football Shop uses the invoice price less discount for recording purchases.

1.) Compute the December 31, 2020, inventory using the FIFO method. (Round per unit and final answer to 2 decimal paces, e.g. 35.57.) Ending Inventory using the FIFO method $

2.)Compute the 2020 cost of goods sold using the LIFO method. (Round per unit and final answer to 2 decimal paces, e.g. 35.57.) Cost of Goods Sold using the LIFO method $

3.) What method would you recommend to the owner to minimize income taxes in 2020, using the inventory information for footballs as a guide?

Answer 1

	Date	Units	Invoice Cost	Discount	Net Cost	Amount
	1/15	51	$22.00	$0.00	$22.00	$1,122.00
	3/15	66	$18.00	$0.18	$17.82	$1,176.12
	6/20	91	$17.00	$0.17	$16.83	$1,531.53
	9/12	85	$13.00	$0.13	$12.87	$1,093.95
	11/24	77	$12.00	$0.12	$11.88	$914.76
		370				$5,838.36
1)	FIFO
		Units	Cost	Amount
		31	$12.87	$398.97
		77	$11.88	$914.76
	Ending Inventory	108		$1,313.73
2)	Cost of goods sold	$3,700.62
	($5,838.36 - $2,137.74)
	LIFO
		Units	Cost	Amount
		51	$22.00	$1,122.00
		57	$17.82	$1,015.74
	Ending Inventory	108		$2,137.74
3)	FIFO