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Following is partial information for the income statement of Audio Solutions Company under three different inventory costing methods, assuming the use of a periodic inventory
Following is partial information for the income statement of Audio Solutions Company under three different inventory costing methods, assuming the use of a periodic inventory system:
Required:
Compute cost of goods sold under the FIFO, LIFO, and average cost inventory costing methods.
Prepare an income statement through pretax income for each method.
Sales, 329 units; unit sales price, $51; Expenses, $1,570
Rank the three methods in order of income taxes paid (favorable cash flow).
\begin{tabular}{|c|c|c|c|c|c|c|} \hline & \multicolumn{2}{|c|}{ FIFO } & \multicolumn{2}{|c|}{ LIFO } & \multicolumn{2}{|c|}{AverageCost} \\ \hline \multicolumn{7}{|l|}{ Cost of goods sold } \\ \hline Beginning inventory (395 units @ \$25) & $ & 9,875 & $ & 9,875 & $ & 9,875 \\ \hline Purchases (466 units @ \$33) & & 15,378 & & 15,378 & & 15,378 \\ \hline Goods available for sale & & 25,253 & & 25,253 & & 25,253 \\ \hline \multicolumn{7}{|l|}{ Ending inventory (532 units ) } \\ \hline Cost of goods sold & & & & & & \\ \hline \end{tabular} Prepare an income statement through pretax income for each method. Sales, 329 units; unit sales price, $51; Expenses, $1,570 Note: Use the COGS amount from Required 1. Rank the three methods in order of income taxes paid (favorable cash flow)
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