Tomorrows Electronic Center began October with 90 units of merchandise inventory that cost $ 70 each. During

Question:

Tomorrows Electronic Center began October with 90 units of merchandise inventory that cost $ 70 each. During October, the store made the following purchases:

Oct. 3 20 units @ $ 75 each

12 40 units @ $ 78 each

18 60 units @ $ 84 each

Tomorrows uses the periodic inventory system, and the physical count at October 31 indicates that 110 units of merchandise inventory are on hand.


Requirements

1. Determine the ending merchandise inventory and cost of goods sold amounts for the October financial statements using the FIFO, LIFO, and weighted-average inventory costing methods.

2. Sales revenue for October totaled $ 26,000. Compute Tomorrows’ gross profit for October using each method.

3. Which method will result in the lowest income taxes for Tomorrows? Why? Which method will result in the highest net income for Tomorrows? Why?


Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
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Horngrens Financial and Managerial Accounting

ISBN: 978-0133255584

4th Edition

Authors: Tracie L. Nobles, Brenda L. Mattison, Ella Mae Matsumura

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