Question
Inventory Costing MethodsPeriodic System Following is an inventory acquisition schedule for Fees Corp. for 2017: Units Unit Cost Beginning inventory 4,000 $20 Purchase: February 4
Inventory Costing MethodsPeriodic System
Following is an inventory acquisition schedule for Fees Corp. for 2017:
Units | Unit Cost | |||
Beginning inventory | 4,000 | $20 | ||
Purchase: | ||||
February 4 | 2,000 | 18 | ||
April 12 | 3,000 | 16 | ||
September 10 | 1,000 | 14 | ||
December 5 | 2,500 | 12 |
During the year, Fees sold 11,000 units at $30 each. All expenses except cost of goods sold and taxes amounted to $60,000. The tax rate is 30%.
Required:
1. Compute cost of goods sold and ending inventory under each of the following three methods listed below assuming a periodic inventory system.
Inventory Costing Method | Ending Inventory | Cost of Goods Sold |
Weighted average | $fill in the blank 850ccafb0f8dfeb_1 | $fill in the blank 850ccafb0f8dfeb_2 |
FIFO | $fill in the blank 850ccafb0f8dfeb_3 | $fill in the blank 850ccafb0f8dfeb_4 |
LIFO | $fill in the blank 850ccafb0f8dfeb_5 | $fill in the blank 850ccafb0f8dfeb_6 |
2. Prepare income statements under each of the three methods.
Fees Corp. | |||
Income Statement | |||
For the Year Ended December 31, 2017 | |||
Weighted Average | FIFO | LIFO | |
$fill in the blank 3a515a045fdd045_2 | $fill in the blank 3a515a045fdd045_3 | $fill in the blank 3a515a045fdd045_4 | |
fill in the blank 3a515a045fdd045_6 | fill in the blank 3a515a045fdd045_7 | fill in the blank 3a515a045fdd045_8 | |
$fill in the blank 3a515a045fdd045_10 | $fill in the blank 3a515a045fdd045_11 | $fill in the blank 3a515a045fdd045_12 | |
fill in the blank 3a515a045fdd045_14 | fill in the blank 3a515a045fdd045_15 | fill in the blank 3a515a045fdd045_16 | |
$fill in the blank 3a515a045fdd045_18 | $fill in the blank 3a515a045fdd045_19 | $fill in the blank 3a515a045fdd045_20 | |
fill in the blank 3a515a045fdd045_22 | fill in the blank 3a515a045fdd045_23 | fill in the blank 3a515a045fdd045_24 | |
$fill in the blank 3a515a045fdd045_26 | $fill in the blank 3a515a045fdd045_27 | $fill in the blank 3a515a045fdd045_28 |
3. Which method do you recommend so that Fees pays the least amount of taxes during 2017?
4. Fees anticipates that unit costs for inventory will increase throughout 2018. Will Fees be able to switch from the method you recommended that it use in 2017 to another method to take advantage of the increase in prices for tax purposes?
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