Comparison of Inventory Costing MethodsPerpetual System (Appendix) Repeat Problem 5-10 using the perpetual system. Problem 5-12 Inventory
Question:
Comparison of Inventory Costing Methods—Perpetual System
(Appendix)
Repeat Problem 5-10 using the perpetual system.
Problem 5-12 Inventory Costing Methods—Periodic System Oxendine Company’s inventory records for the month of November reveal the following:
Inventory, November 1 200 units @ $18.00 November 4, purchase 250 units @ $18.50 November 7, sale 300 units @ $42.00 November 13, purchase 220 units @ $18.90 November 18, purchase 150 units @ $19.00 November 22, sale 380 units @ $42.50 November 24, purchase 200 units @ $19.20 November 28, sale 110 units @ $43.00 Selling and administrative expenses for the month were $10,800. Depreciation expense was $4,000. Oxendine’s tax rate is 35%.
Required 1. Calculate the cost of goods sold and ending inventory under each of the following three methods assuming a periodic inventory system:
(a) FIFO,
(b) LIFO, and (c)
weighted average.
2. Calculate the gross profi t and net income under each costing assumption.
3. Under which costing method will Oxendine pay the least taxes? Explain your answer.
4. Assume that Oxendine prepares its fi nancial statements in accordance with IFRS.
Which costing method should the company use to pay the least amount of taxes?
Explain your answer.AppendixLO1
Step by Step Answer:
Using Financial Accounting Information The Alternative To Debits And Credits
ISBN: 9780538452748
7th Edition
Authors: Curtis L. Norton, Gary A. Porter