Scrappers Supplies tracks the number of units purchased and sold throughout each accounting period but applies its

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Scrappers Supplies tracks the number of units purchased and sold throughout each accounting period but applies its inventory costing method at the end of each period, as if it uses a periodic inventory system. Assume its accounting records provided the following information at the end of the annual accounting period, December 31, 2013.
Transactions Units Unit Cost
Beginning inventory, January 1, 2013............ 200.......................... $30
Transactions during 2013:
a. Purchase on account, March 2.................. 300........................... 32
b. Cash sale, April 1 ($46 each)................. (350)
c. Purchase on account, June 30................... 250............................36
d. Cash sale, August 1 ($46 each)................ (50)
Required:
1. Compute the cost of goods available for sale, cost of ending inventory, and cost of goods sold at December 31, 2013, under each of the following inventory costing methods:
a. Last-in, first-out.
b. Weighted average cost.
c. First-in, first-out.
d. Specific identification, assuming that the April 1, 2013, sale was selected one-fifth from the beginning inventory and four-fifths from the purchase of March 2, 2013. Assume that the sale of August 1, 2013, was selected from the purchase of June 30, 2013.
2. Of the four methods, which will result in the highest gross profit? Which will result in the lowest income taxes?
Ending Inventory
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula                Ending Inventory Formula =...
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Fundamentals of Financial Accounting

ISBN: 978-0078025372

4th edition

Authors: Fred Phillips, Robert Libby, Patricia Libby

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