MusicBiz.net Ltd. specializes in sound equipment. Because each inventory jtem is expensive, MusicBiz uses a perpetual inventory system. Company records indicate the following data for a line of speakers:

{Requirements}
1. Determine the amounts that MusicBiz should report for cost of goods sold and ending inventory in the following two ways:

a. FIFO

b. Weighted-average cost 2. MusicBiz uses the FIFO method. Prepare MusicBiz's income statement for the month ended June 30, 2020, reporting gross profit. Operating expenses totalled \(\$ 319\), and the income tax rate was \(25 \%\).
3. Music Biz is thinking of changing inventory costing methods from FIFO to weighted average cost. Are they allowed to make this change? Briefly explain.

Transcribed Image Text:

Date Item Quantity Unit Cost Sale Price June 1 Balance 6 $95 8 Sale 3 $155 10 Purchase 11 100 30 Sale 5 160