Question

Daniel Company uses a periodic inventory system. Data for 2015: beginning merchandise inventory (December 31, 2014), 2,000 units at $38; purchases, 7,970 units at $40; expenses (excluding income taxes), $193,100; ending inventory per physical count at December 31, 2015, 1,780; sales, 8,190 units; sales price per unit, $79; and average income tax rate, 34 percent

Required:

1.	Compute cost of goods sold and prepare income statements under the FIFO, LIFO, and average cost inventory costing methods. (Do not round your intermediate calculations.)

7970

	Inventory Costing Method Cost of Goods Sold Units FIFO LIFO Average Cost Beginning inventory 2,000 Purchases 7,970 Goods available for sale 9,970 0 0 0 Ending inventory Cost of goods sold

	Income Statement FIFO LIFO Average Cost

Answer 1

Q1		Inventory Costing Method
	Cost of Goods Sold	Units	FIFO	LIFO	Average Cost
	Beginning inventory	2,000	$       76,000	$       76,000	$      76,000
	Purchases	7,970	$     318,800	$     318,800	$     318,800
	Goods available for sale	9,970	$     394,800	$     394,800	$     394,800
	Ending inventory	1,780	$       71,200	$       67,640	$      70,486
	Cost of goods sold	8,190	$     323,600	$     327,160	$     324,314
Q2		FIFO	LIFO	Average Cost
	Sales (8190*79)	$        647,010	$        647,010	$        647,010
	Cost of goods sold	$        323,600	$        327,160	$        324,314
	Gross profit	$        323,410	$        319,850	$        322,696
	Tax @34% on gross profit	$        109,959	$        108,749	$        109,717
	Net Income	$        213,451	$        211,101	$        212,979