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A. 2018 was the first year of operations of CHARLIE Co. The firm made the hases during 2018 Month Price Total Value ant 1,000 1,000
A. 2018 was the first year of operations of CHARLIE Co. The firm made the hases during 2018 Month Price Total Value ant 1,000 1,000 1,000 1,000 1.000 5,000 90,000 95,000 98,000 100,000 105.000 488,000 January March 95 98 100 105 April November Totals The number of units sold during 2018 was 3,500 the last sale took place on 30 December and the amount of sales revenues was 1,500,000. The maximum firm's storage capacity was 4,000 units. The firm applies a periodic inventory system. The expenses other than cost of goods sold and tax expense amounted to 800,000 while firm's equity on January 1, 2018, was 400,000. The selling price of the inventory as at December 31, 2018 was 110. The firm's income tax rate is 30%. Required . Indicate which inventory costing method (FIFO, Weighted Average or LIFO) should CHARLIE Co. adopt in order to maximize the firm's equity assuming that the estimated costs to make a sale were 2 per unit of sold merchandise. The purchasing price of the inventory at December 31, 2018 was 109. (5%) 2. Reexamine your answer to question 1 assuming that the firm examines the possibility to exploit the maximum available storage capacity in order to make a last inventory purchase at December 31, 2018, when the purchasing price was per 90 unit and the estimated costs to make a sale were 25 per unit of sold merchandise. (5%) Note: all calculations should be provided B. Cost of goods sold may be calculated as a residual amount that can misstate the actual amount of cost of goods sold. Explain under what circumstances this statement can be true. (Word limit 500 words) (10%)
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