Comparison of Inventory Costing MethodsPerpetual System (Appendix)

Bitten Company's inventory records show 600 units on hand on October 1 with a unit cost of $5 each.

The following transactions occurred during the month of October:

Date		Unit Purchases		Unit Sales
October 4				500 @ $10.00
8		800 @ $5.40
9				700 @ $10.00
18		700 @ $5.76
20				800 @ $11.00
29		800 @ $5.90

All expenses other than cost of goods sold amount to $3,000 for the month. The company uses an estimated tax rate of 30% to accrue monthly income taxes.

Required:

1. Prepare a chart comparing cost of goods sold and ending inventory using the perpetual system and the following costing methods. In your calculations round moving average unit cost to three decimal places and round all other calculations and your final answers to the nearest dollar.

Bitten Company
Comparison for Cost of Goods Sold and Ending Inventory Using the Perpetual System
For Moving Average, FIFO and LIFO Cost Methods
	Cost of Goods Sold	Ending Inventory	Total
Moving Average	$	$	$
FIFO
LIFO

2. What does the Total column represent?

3. Prepare income statements for each of the three methods. When required, round your answers to the nearest dollar.

Bitten Company
Income Statement
For the Month of October
	Weighted Average	FIFO	LIFO
	$	$	$
	$	$	$
	$	$	$
	$	$	$

4. Will the company pay more or less tax if it uses FIFO rather than LIFO?

How much more or less?