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Item 6

Item 6 1.42 points

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.

Transactions	Units				Unit Cost
Beginning inventory, January 1		200			$	30
Transactions during the year:
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	)

TIP: Although the purchases and sales are listed in chronological order, Scrappers determines the cost of goods sold after all of the purchases have occurred.

Required:

1. Compute the cost of goods available for sale, cost of ending inventory, and cost of goods sold at December 31 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 sale was selected one-fifth from the beginning inventory and four-fifths from the purchase of March 2. Assume that the sale of August 1 was selected from the purchase of June 30.
2. Of the four methods, which will result in the highest gross profit? Which will result in the lowest income taxes?

Specific Identification (Periodic)
	Units	Cost per Unit	Total
Beginning Inventory	200	$30.00	$6,000
Purchases
March 2	300	$32.00
June 30	250	$36.00
Total Purchases	550		18,600
Goods Available for Sale	750		24,600
Cost of Goods Sold
Units from Beginning Inventory		$30.00
Units from March 2 Purchase		$32.00
Units from June 30 Purchase	50	$36.00
Total Cost of Goods Sold	50		1,800
Ending Inventory	350

I cannot figure out the values for ending inventory, total cost of goods sold, units from March 2 purchase and units from beginning inventory