Question

			Units	Per unit cost
Beginning Inventory			200	$      120.00	$   24,000.00
30-Jan	purchase		130	$      124.00	$   16,120.00
12-Mar	purchase		220	$      128.00	$   28,160.00
Total
Sales			350	$      320.00	$ 112,000.00
Ending Inventory
FIFO							LIFO
Ending Inventory							Ending Inventory
Goods Available for Sale							Goods Available for Sale
Deduct ending Inventory							Deduct ending Inventory
Cost of Goods Sold							Cost of Goods Sold
Sales							Sales
Cost of Goods Sold							Cost of Goods Sold
Gross Profit							Gross Profit
Operating Expense				$ 24,000.00			Operating Expense			$ 24,000.00
Operating Income before tax							Operating Income before tax
Income Tax		40%					Income Tax	40%
Net Profit							Net Profit
Weighted Average
Average Cost
Ending Inventory
Goods Available for Sale
Deduct ending Inventory
Cost of Goods Sold
Sales
Cost of Goods Sold
Gross Profit
Operating Expense				$ 24,000.00
Operating Income before tax
Income Tax		40%
Net Profit

The accounting records of Allen Insulation, Inc. reflected the following balances as of January 1, 20xx:

Cash	$36,000
Beginning Inventory	$24,000 (200 units @ $120)
Common Stock	$25,000
Retained Earnings	$35,000

The following transactions occurred in 20XX:

January 30^th Purchase (cash) 130 units @ $124

March 12th Purchase (cash)    220 units @$128

June 3^rd Sale (cash)                 350 units @$320

Paid $24,000 of operating expenses.

Paid cash for income tax at the rate of 40 percent of income before tax.

Compute the cost of goods sold, ending inventory, gross profit, income tax expense and net profit assuming:

FIFO cost flow

LIFO cost flow

Weighted-average cost flow

Answer 1

	FIFO Method
Date	Description	Qty	Rate	Amt.
	Opening Inventory	200	120	24,000
Jan-30	Purchase	130	124	16,120
Mar-12	Purchase	220	128	28,160
	Total Goods Avilable	550		68,280
	Less: Sales
		200	120	24,000
		130	124	16,120
		20	128	2,560
	Cost of Goods Sold	350		42,680
	Ending Inventory	200		25,600
	Income Statement
	Sale (350*320)		112,000
	Less:
	Cost of Goods Sold		42,680
	Gross Profit		69,320
	Operating Expenses		24,000
	Income Before tax		45,320
	Income tax		18,128
	Net Profit		27,192
	LIFO Method
Date	Description	Qty	Rate	Amt.
	Opening Inventory	200	120	24,000
Jan-30	Purchase	130	124	16,120
Mar-12	Purchase	220	128	28,160
	Total Goods Avilable	550		68,280
	Less: Sales
		220	128	28,160
		130	124	16,120
	Cost of Goods Sold	350		44,280
	Ending Inventory	200		24,000
	Income Statement
	Sale (350*320)		112,000
	Less:
	Cost of Goods Sold		44,280
	Gross Profit		67,720
	Operating Expenses		24,000
	Income Before tax		43,720
	Income tax		17,488
	Net Profit		26,232
	Weighted Average
Date	Description	Qty	Rate	Amt.
	Opening Inventory	200	120	24,000
Jan-30	Purchase	130	124	16,120
Mar-12	Purchase	220	128	28,160
	Total Goods Avilable	550	124.15	68,280
	Less: Sales
		350	124.15	43,451
	Cost of Goods Sold	350		43,451
	Ending Inventory	200		24,829
	Income Statement
	Sale (350*320)		112,000
	Less:
	Cost of Goods Sold		43,451
	Gross Profit		68,549
	Operating Expenses		24,000
	Income Before tax		44,549
	Income tax		17,820
	Net Profit		26,729