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During the year, a Jackson Company's inventory purchases were as follows: Quarter Units Purchased Cost per Unit Total 1 400 3.3 $1,320 2 100 3.6
During the year, a Jackson Company's inventory purchases were as follows: | |||
Quarter | Units Purchased | Cost per Unit | Total |
1 | 400 | 3.3 | $1,320 |
2 | 100 | 3.6 | 360 |
3 | 200 | 3.9 | 780 |
4 | 50 | 4.2 | 210 |
The firm uses a periodic inventory system and calculates inventory and COGS at the end of the year. | |||
Beginning Inventory was 200 units at $3 per unit. | |||
Sales for the year were 600 units. |
a)Compute COGS for the year under FIFO (show all work)
b) Compute COGS for the year under LIFO (show all work)
c) Which method, LIFO or FIFO, would lead to greater Net Income?
|
D) Considering that Jackson must pay Income Taxes, which method would lead to greater cash flow? |
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