Assume that you own a hat shop, and one of your hats has the ALB emblem on it.

Unfortunately, the cost of ALB hats has steadily increased, and you're trying to figure out which inventory costing method to utilize for financial statements or tax purposes.

In January, you paid a total of $48 for three hats purchased three different times, and the following is the cost of each hat.

Item: ALB hat

Purchasing Date unit Cost

Jan. 5 1 $13

Jan. 15 1 $15

Jan. 25 1 $20

Total 3 $48

Average cost per unit $16 ($48/3)

Only one hat is sold in January on the 29th for $30.

1. Compare the gross profit and ending balance of merchandise inventory on January 31 using FIFO, LIFO, and weighted average cost methods.
2. Which inventory costing method do you want to use to save tax expenses?
3. Which inventory costing method do you want to use to show the vital asset?

Answer rating: 100% (QA)

To compare the gross profit and ending balance of merchandise inventory on January 31 using FIFO LIFO and weighted average cost methods lets calculate ... View the full answer