Comet Appliances and Supply began December with 280 units of inventory that cost $90 each. During December, the store made the following purchases:
Dec. 3 ............................ 430 units at $91
12 ................................. 190 units at $92
18 ................................. 420 units at $93
24 ................................. 426 units at $92
The store uses the periodic inventory system, and the physical count at December 31 indicates that 458 units of inventory are on hand.
Required
1. Determine the ending inventory and cost-of-goods-sold amounts for the December financial statements under the weighted-average-cost and FIFO methods. Round the average cost per unit to the nearest cent and all other amounts to the nearest dollar.
2. Sales revenue for December totalled $192,000. Compute Comet Appliances and Supply's gross margin for December under each method.
3. Which method will result in the lower income taxes for Comet? Why? Which method will result in the higher net income for Comet? Why?